USA Pharmaceutical Contract Manufacturing Market Outlook to 2028

USA Pharmaceutical Contract Manufacturing Market Overview

The USA Pharmaceutical Contract Manufacturing Market size was valued at USD 59.85 billion in 2023. The growth has been propelled by rising outsourcing needs from pharmaceutical companies. With the increasing cost of drug development and the demand for more complex biologics, many companies are opting to outsource their production processes.

The market is dominated by key players such as Lonza Group, Catalent Inc., Patheon (Thermo Fisher Scientific), Baxter Bio Pharma Solutions, and Samsung Biologics. These companies offer a wide range of contract services, from active pharmaceutical ingredient (API) production to final drug formulation.

Catalent is investing $350 million to expand its Bloomington, Indiana facility for biologics drug substance and drug product manufacturing. The project will include 2000-liter bioreactors, syringe filling lines, and lyophilization capabilities, expected to be operational by 2024.

The state of California has emerged as the leading region in the market, due to its high concentration of biotech and pharmaceutical companies, particularly in the Bay Area. Additionally, the presence of world-class research institutions and a robust talent pool has made it a hub for pharmaceutical innovation, driving demand for contract manufacturing services.

USA Pharmaceutical Contract Manufacturing Market Segmentation

The market is segmented into various factors like product, services, and region.

By Product: The market is segmented by product into solid dosage forms, liquid dosage forms, and injectable products. Injectable products held the largest market share, due to the increasing number of biologics and complex therapies requiring injectable delivery systems. Moreover, contract manufacturers have ramped up production capacity for injectables, particularly for biologics like monoclonal antibodies and gene therapies.

By Services: The market is segmented by services into active pharmaceutical ingredients (APIs), finished dosage formulations, and packaging. APIs led the market due to the increasing outsourcing of bulk drug substances. Many pharmaceutical companies prefer outsourcing API production to contract manufacturers, particularly for complex molecules and biologics.

By Region: The market is segmented by region into North, South, East, and West. The North region, which includes major hubs like New York and Massachusetts, held a dominant share by the concentration of pharmaceutical companies, strong regulatory frameworks, and extensive investments in life sciences research.

USA Pharmaceutical Contract Manufacturing Market Competitive Landscape

Company

Established

Headquarters

Lonza Group

1897

Basel, Switzerland

Catalent Inc.

1933

New Jersey, USA

Patheon (Thermo Fisher)

1974

North Carolina, USA

Baxter Bio Pharma Solutions

1931

Illinois, USA

Samsung Biologics

2011

Seoul, South Korea

Patheon (Thermo Fisher): Thermo Fisher announced a USD 200 million investment in expanding its North Carolina facility, focusing on sterile drug production. This move reflects the growing demand for sterile injectables and high-potency API manufacturing.

Lonza Group: Lonza struck a $1.2 billion deal to acquire Roche's large biologics manufacturing plant in Vacaville, California. The site, one of the largest by volume, boasts 330,000 liters of bioreactor capacity. Lonza plans a $561 million expansion, aiming to boost mammalian biologics manufacturing for next-gen therapies.

USA Pharmaceutical Contract Manufacturing Market Analysis

Market Growth Drivers

Rising Demand for Generic Drugs: The USA is experiencing increased demand for generic drugs due to the rising costs of branded medications. According to the FDA's reports, there were 90 first generic drug approvals in 2023. This includes approvals for various medications that allow manufacturers to market generic alternatives in the United States, which are essential for providing affordable treatment options to patients.

Increased R&D Investments: Global pharmaceutical R&D spending hit a record $244 billion, driven by a focus on innovation and new drug development. The top 20 pharmaceutical companies invested $145 billion in R&D in 2023, a 4.5% increase from the previous year.Astra Zeneca spent over 23% of its prescription drug revenues on R&D.

Increased Biopharmaceutical Production: The surge in demand for biopharmaceuticals is a primary driver for the market. In 2023, biopharmaceutical companies required a large production space due to the increased focus on monoclonal antibodies and gene therapies. Contract manufacturers have stepped in to meet this demand.

Market Challenges

Supply Chain Disruptions: The global supply chain disruptions, exacerbated by geopolitical tensions and transportation delays, have impacted the market. There were delays in the import of raw materials such as APIs from key markets like China and India, leading to production backlogs and increased costs. These disruptions have highlighted the need for contract manufacturers to diversify their supplier base to maintain a steady flow of materials.

Cost Pressure and Pricing Challenges: Pharmaceutical companies are facing increasing pressure to reduce drug costs, which is transferred to contract manufacturers. Contract manufacturers faced a 10% rise in raw material costs, especially for APIs and packaging materials. These rising costs have put significant pressure on profit margins, making it more challenging for contract manufacturers to maintain profitability while meeting demand.

Government Initiatives

Biomedical Advanced Research and Development Authority (BARDA): In 2024, BARDA awarded $500 million through Project Next Gen to support Phase 2b clinical trials, including oral and nasal vaccines. These trials aim to advance innovative, easily administered vaccines. The funding supports Vaxart, Castlevax, and Cyanvac to accelerate vaccine development and improve public health preparedness.

Drug Supply Chain Security Act (DSCSA) Implementation: The full implementation of the DSCSA in 2024 will require pharmaceutical manufacturers to comply with stricter tracking and tracing requirements for drugs throughout the supply chain. Contract manufacturers must invest in serialization technologies to comply with these regulations, which will increase production costs but also improve the transparency and security of the drug supply chain.

USA Pharmaceutical Contract Manufacturing Market Future Outlook

The future trends in USA pharmaceutical contract manufacturing market include the adoption of continuous manufacturing technologies, the rise of personalized medicines, and expansion in biologics production capabilities.

Future Market Trends

Shift Towards Continuous Manufacturing: Over the next five years, contract manufacturers will increasingly adopt continuous manufacturing technologies, which can improve production efficiency. Continuous manufacturing allows for the uninterrupted production of drugs, reducing downtime and increasing output.

Rise in Personalized Medicine: The future of the pharmaceutical contract manufacturing industry will be driven by personalized medicine, which is expected to grow by 2028. With over 300 personalized therapies currently in development, contract manufacturers will be required to scale up their production capacities for smaller, specialized batches of drugs.
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