Introduction
The model of Contract Development and Manufacturing Organization (CDMO) — also referred to as toll manufacturing or contract manufacturing — has become a cornerstone for flexibility and innovation in the global pharmaceutical industry. Through this approach, licence holder with third-party manufacturers for drug development, production, and packaging without building their own facilities.
Regulatory Compliance
- In Indonesia, contract manufacturing of pharmaceuticals is permitted only for companies holding valid Good Manufacturing Practice (GMP / CPOB) certification
- The regulatory framework enforced by the national drug authority, Badan Pengawas Obat dan Makanan (BPOM), requires that any outsourced manufacturing adheres strictly to GMP standards — covering quality control, sanitation, documentation, and facility qualification
- A formal, written manufacturing agreement (technical agreement) is essential, delineating responsibilities including formula ownership, batch records, change control, quality assurance, regulatory compliance, margin of liability, and supply chain management
- Even when production is outsourced, the MAH remains legally accountable for final product safety, efficacy, and quality
Strategy & Advantages toll manufacturing
Adopting a CDMO / toll manufacturing model offers multiple strategic benefits for pharmaceutical companies:
- CapEx savings: Avoids the large capital investment required to build and maintain manufacturing facilities.
- Focus on core competencies: Enables firms to concentrate on branding, marketing, regulatory affairs, and distribution while leaving production to specialists.
- Scalability and flexibility: Ideal for rapid product launch, scaling up manufacturing or entering new markets without delay.
- Access to specialized expertise and technology: For complex formulations, advanced dosage forms, high-volume production, or regulatory-grade manufacturing for export markets.
Challenges do exist — ensuring batch-to-batch consistency, managing supply chain dependencies, logistics, and maintaining control over quality standards.