Pharmaceutical Contract Development and Manufacturing Organization (CDMO) Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

Market Overview

The global pharmaceutical CDMO market was valued at USD 183.62 billion in 2021, and it is expected to reach USD 289.64 billion by 2027, registering a CAGR of 7.29% during the period of the forecast period.

• As a result of the rising demand for generic medicines and biologics, the capital-intensive nature of the business, and the complex manufacturing requirements, many pharmaceutical companies have identified the potential profitability in contracting with a CMO (contract manufacturing outsourcing) for both clinical and commercial stage manufacturing.
• The most significant factor driving the growth of CMOs in the pharmaceutical industry is the growing need for state-of-the-art processes and production technologies, which have proven significantly effective in meeting regulatory requirements.
• The pharmaceutical companies have been directing their priorities towards core competency areas. Hence, they prefer not to dispense available resources, expertise, and technology on formulating the final dose of medicines. The increased competition and shrinking profit margins compelled the pharmaceutical companies to revisit their production processes and R&D activities instead of manufacturing the formulated drug to stay competitive in the market.
• Furthermore, the complexity of the biopharmaceuticals, coupled with the highly personalized medical therapies and devices, drive the increased complexity in the operations of the supply chain and lead to increasing reliance on contract manufacturing. Factors such as these are helpful in the proliferation of the CMO market. In March 2021, Fujifilm Diosynth Biotechnologies selected Holly Springs, North Carolina, for its new JPY 200 billion large-scale cell-culture biomanufacturing site. The new facility will provide large-scale cell-culture manufacturing for bulk drug-substance production. The facility is expected to be operational by the spring of 2025.
• The CMO/CDMO service sector is uniquely positioned to address some of the challenges that drug developers face amid the COVID-19 pandemic. This pandemic has impacted multiple aspects of the pharma and biopharma industry, from drug development, clinical trials, supplies, manufacturing to supply chain logistics. However, the drug shortages due to COVID-19 are limited, and they are expected to remain so for the short term due to stockpiles of pharmaceuticals, APIs globally.

Scope of the Report

Contract manufacturing is a form of outsourcing where a manufacturer enters a formal agreement with another manufacturing firm for its parts, products, or components. The former manufacturer uses these in its manufacturing process for manufacturing its products. The study provides a granular view of the current CMO industry, with a further breakdown of each segment by region.

A contract manufacturing organization (CMO) is an organization that serves the pharmaceutical industry and provides clients with comprehensive services, from drug development to manufacturing. Outsourcing to a CMO allows the pharmaceutical clients to expand theIR technical resources without increased overhead. The client can manage its internal resources and costs by focusing on its core competencies and high-value projects while reducing or not adding infrastructure or technical staff.

The study provides a granular view of the current CMO industry, with a further breakdown of each segment by region, as listed in the index.

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Key Market Trends

Increasing Investment in R&D expected to Drive the Market

• The United States is the world’s largest market for drugs and accounts for almost half of the R&D spending in the pharmaceutical and biotechnology markets. Hence, CMOs play a critical role in this market and have invested in new facilities and technologies to cater to a wide range of outsourcing units.
• Besides capturing the benefits of a location in Asia through an in-house investment, companies are also turning to research-based partnerships as a way of high-end sourcing expertise, building drug discovery, and manufacturing investment in Asia.
• The biggest Chinese professional manufacturer of dermatology and anti-tuberculosis drug products, Huapont, is one of the fastest-growing pharmaceutical manufacturers in China, mainly dependent on product R&D and market expansion.
• CRO/CMOs are able to leverage their expertise, owing to their R&D and complex manufacturing capabilities, to fill the needs of the large generic, big pharmaceutical, and biotech companies.
• The highly fragmented nature of the US pharmaceutical contract manufacturing market, with over 150 CMOs, results in price competition and drives down CMO revenue.
• A major stake of R&D investments and capacity expansions is likely in the injectable and sterile liquid dose formulations segment. Small biotech firms get access to specialized knowledge and resources, which help them expedite their R&D activities.
• Greater technological complexity in drug development and greater specificity in disease targets have helped raise average R&D costs, as firms now identify drugs with particular molecular characteristics as opposed to using trial-and-error methods to find compounds that work in some desired way.

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