“Managing hundreds of products across multiple species requires a different approach to network strategy than human pharma,” explains Bernhard Boehm, Head of External Manufacturing for Animal Health at Boehringer Ingelheim.
Bernhard Boehm leads external manufacturing for animal health as VP of 3PM at Boehringer Ingelheim, bringing nearly 20 years of pharmaceutical experience across regulatory, quality, R&D, and site management roles before transitioning to animal health five years ago.
Ahead of CDMO Live, Bernhard explains how animal health manufacturing differs fundamentally from human pharmaceuticals, requiring specific strategies to manage a complex portfolio across multiple species while facing tighter margins and diverse customer needs.
1. Species-Driven Portfolio Complexity
Animal health manufacturing faces unprecedented complexity compared to human pharma, primarily due to the diversity of species requiring treatment.
“We have two types of businesses in animal health which are very different. One is livestock, the other is companion animals,” Bernhard explains. “In the livestock area we cover poultry, cattle, and swine. Some companies also have aquaculture.”
This species diversity directly impacts product portfolio and formulations: “Even if the disease is the same in cats and dogs, it’s not necessarily that they can take the same drug. The same active ingredient can work pretty well and be safe in dogs, but can be ineffective or toxic in cats.”
This complexity leads to a massive product portfolio: “It will probably be a couple of hundred products. I’m not talking about SKUs – that’s many thousands. It’s quite complex, many more products than I’ve typically seen in human pharma.”
2. Different Economic Models Drive Manufacturing Strategy
The animal health sector operates with significantly different economic parameters than human pharmaceuticals, creating distinct manufacturing challenges and strategies.
“Animal health, from my perspective, is much closer to fast-moving consumer goods or OTC business in human pharma than prescription drug human pharma,” Bernhard notes. “It comes with price pressure and different margins, but it’s also about the nature of the business – faster, more dynamic, different types of customers.”
These economic realities vary dramatically across segments: “In livestock, we have even more pressure on margin. We all expect to buy good quality but not too expensive meat. This comes with huge pressure on farmers and producers. They cannot afford spending a huge amount of money for vaccination or treatment of their animals.”
These market dynamics shape manufacturing approaches: “It requires our supply chain to be set up for that kind of business. It’s different if you deal with individual veterinarians or large retail chains. The way we supply them, how flexible we are, talking about changes of packaging concepts or packaging materials – that drives part of the complexity we’re dealing with.”
3. Strategic Partner Network Rationalisation
Best practice in animal health manufacturing requires strategic rationalisation of external supply partners, as Boehringer Ingelheim has demonstrated.
“We’re currently at around 70 CMOs and more than 30 API suppliers, so it’s a bit more than 100 external partners,” Bernhard explains. “The number alone doesn’t tell the whole story – it’s more about the spend distribution.”
This marks significant progress from their previous position: “In the past, we had more than 250 CMOs, which was clearly way too much for what we are doing. We’ve done a lot of work over the last three to four years to bring that number down to where we are today.”
Bernhard advocates a clear strategy: “I would always strive to have the majority of external partners with a spend that is important enough for our partners to become attractive and important business partners. It’s good for them if they have a customer who can bring certain volumes and help them do good business. It’s also good for us.”
The goal isn’t simply reducing numbers: “I would still want to consolidate volumes a little bit more towards the larger partners or to-be larger partners, because in the end, it’s not only size and cost; it’s at least as important to have reliable partners who provide good quality at a reasonable competitive price.”
4. Portfolio Optimisation Discipline
Regular portfolio optimisation is essential in animal health manufacturing to prevent unsustainable complexity and maintain profitability.
“Portfolio optimization plays a very important role to keep costs somewhat under control,” Bernhard emphasises. “With that inherent complexity, there’s a higher danger that the portfolio will explode.”
Boehringer Ingelheim implements an annual review process: “Throughout the year, we’re constantly identifying products or SKUs or sometimes suppliers where we say we’re below critical mass.”
The review examines multiple factors: “It can mean it’s below critical mass or below certain profitability margins. It can be that we no longer have sufficient performance in the markets. But it can also be driven from a CMO perspective.”
Bernhard highlights how sub-scale products at specific CMOs create inefficiency: “We have a base effort which you always have from requirements from a quality and EHS perspective. No matter how much you do with that CMO and how much volume you produce, you still have this base amount of effort. At some point, that will kill your profitability.”
5. Building Strategic Supplier Relationships
Converting transactional supplier relationships into strategic partnerships requires a thoughtful approach centered on mutual value creation and long-term planning.
“In order to have a strategic relationship, there need to be two partners who see that as a strategic relationship,” Bernhard stresses. “It’s not enough for us as Boehringer to say ‘you are a strategic supplier to us’ if the partner doesn’t see us as their strategic customer.”
The foundation lies in mutual value: “In order to get to the point where both partners really see the value of having a strategic partnership, it starts with the question: how do we create value on both sides? Of course we want to have prices as low as possible. At the same time, our partners want to grow, to strive, to earn money.”
What elevates a relationship from transactional to strategic is the time horizon: “What makes it strategic is that it’s not only volume today and tomorrow, but constantly looking strategically ahead—five to even sometimes 10 years—and keeping the dialogue about future opportunities. Products go through their lifecycle; portfolios change. Today’s blockbuster and volume driver in five years might be a shrinking product.”
The partnership becomes truly strategic when both sides plan together: “That more long-term view and the commitment on both sides to treat it as a long-term relationship rather than a transactional or opportunistic relationship—that’s the key where it makes a difference.”
6. Future-Proofing Networks Against Emerging Trends
Several major trends are reshaping animal health manufacturing, requiring adaptable supply chains and forward-looking manufacturing strategies.
“Global population is further increasing, which comes with increased demand for animal proteins,” Bernhard notes. “Even though from a European perspective you might say ‘everybody’s going vegan and vegetarian,’ if you look globally, there’s clearly an increasing demand, especially in emerging countries.”
Demographic shifts require strategic planning: “Today’s young generations have a very different behaviour when it comes to shopping and technology use. They’re digital natives who will adapt to AI much faster than older generations. This drives different generational needs, requiring solutions and channels more tailored to their behaviours.”
Urbanisation presents another strategic consideration: “Cities and mega-cities are growing while rural areas lose inhabitants. For animal health, that impacts the types of pets people can have. If you’re living in Tokyo in a 10-square-meter apartment, you cannot afford to have a Great Dane. That drives the type of pets to be treated, which has a direct impact on our portfolio.”
Sustainability concerns add further complexity: “We talked about increased need for meat on one hand. On the other hand, we have discussions about climate change and the impact of livestock on the CO2 footprint. We as an industry cannot just close our eyes.”
Looking forward, Bernhard sees technological advancement offering new possibilities: “Artificial intelligence will have an impact on our industry. It brings great opportunities in diagnostics, public veterinary health, and supply efficiency through better data processing. It can help us become more efficient because we can process more data and get interpretation of data.”
Don’t miss the External Manufacturing 2030 panel at CDMO Live 2025, with Bernhard Boehm alongside counterparts at Bayer and Bristol Myers Squibb. Download the agenda here
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