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

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

The Pharmaceutical CDMO Market is expected to register a CAGR of 7.29% during the forecast period (2022 - 2027). The contract development and manufacturing organization outsourcing market will expand due to the expanding pharmaceutical sector. The key trend affecting the market growth for outsourcing by contract development and manufacturing organizations is the growing usage of analytics by CDMOs.

Key Highlights

• Many pharmaceutical companies have realized the potential financial gains of working with a CMO (contract manufacturing outsourcing) for clinical and commercial stage production due to the rising demand for generic drugs and biologics, the capital-intensive nature of the sector, and the complex manufacturing requirements.
• The necessity for modern methods and production technologies, which have shown to be highly effective in meeting regulatory standards, is the key factor influencing the expansion of CMOs in the pharmaceutical business.
• The core competency areas have been receiving priority attention from pharmaceutical corporations. The companies, therefore, prefer not to use the existing tools, knowledge, and technology when determining the final dosage of medications. Instead of manufacturing the formulated drug to remain competitive in the market, pharmaceutical companies had to review their production techniques and R&D operations due to growing competition and narrowing profit margins.
• The complication of biopharmaceuticals, as well as highly customized medical therapies and equipment, drives the growth in the complexity of supply chain operations and the reliance on contract manufacturing. Such factors aid the expansion of the CMO industry. In March 2021, Holly Springs, North Carolina, was chosen by Fujifilm Diosynth Biotechnologies as the location of its new JPY 200 billion large-scale cell-culture biomanufacturing facility. The new facility will offer large-scale cell-culture manufacturing for synthesizing bulk pharmaceutical ingredients. By spring 2025, the facility is anticipated to be open for business.
• With the COVID-19 pandemic, drug researchers faced several difficulties that the CMO/CDMO service industry is well positioned to address. Numerous aspects of the pharmaceutical and biopharmaceutical industries have been impacted by this pandemic, including supply chain logistics, medication development, clinical trials, and supplies. However, the global stocks of pharmaceuticals and APIs have prevented any significant drug shortages due to COVID-19, and these shortages are anticipated to last only for a short time.

Key Market TrendsIncreasing Investment in R&D expected to Drive the Market

• The United States is a significant market for pharmaceuticals, contributing over half of the R&D budget for the biotechnology and pharmaceutical industries. Therefore, CDMOs are essential in this industry and have invested in new facilities and technology to serve a variety of outsourcing units. The businesses are turning to research-based partnerships in addition to internal investments to reap the benefits of an Asian location for high-end sourcing expertise, medication discovery, and manufacturing assets.
• Huapont, a professional Chinese maker of dermatology and anti-tuberculosis medications, is one of the country's fastest-growing pharmaceutical companies, relying mostly on R&D and market expansion. CRO/CMOs can meet the needs of the big generic pharmaceutical and biotech businesses by utilizing their knowledge due to their complicated manufacturing and R&D capabilities.
• The progressive move from cost control to a renewed emphasis on value-added services was caused by changes in the operating principles of the companies in the market. Additionally, they made it possible for them to be included in businesses' value chains. With more than 150 CMOs operating in the US pharmaceutical contract manufacturing market, the market is highly fragmented, which leads to price rivalry and lowers CMOs' revenue.
• The injectable and sterile liquid dosage formulations market is anticipated to see investments in R&D and capacity expansions. Small biotech companies have access to technical information and tools, which speeds up their R&D efforts. The average R&D cost decreased due to companies identifying drugs with specific molecular characteristics instead of using trial-and-error techniques to find compounds that functioned in the desired way due to increased technological complexity in drug development and increased specificity in targets.
• Additionally, government healthcare programs help numerous regional businesses create new products by implementing diverse market strategies. For instance, the Indian government has created a pathway for drug companies through programs like Ayushman Bharat and Jan Aushadhi Yojana to deliver high-quality, reasonably priced medications to every community in the nation. Ayushman Bharat seeks to achieve Universal Health Coverage through the construction of 150,000 Health and Wellness Centers (HWCs) by the year 2022 to bring free, high-quality healthcare closer to people's homes and the PM-JAY (Pradhan Mantri Jan Arogya Yojana), a health insurance program for disadvantaged and vulnerable families. CDMOs, such as Dr. Reddy's Laboratories, Akums Drugs and Pharmaceuticals Limited, Windlas Biotech, etc., are well positioned to provide generic medications at a reasonable price while achieving the necessary quality standards.
• The need for research and development in the market is further highlighted by the requirement for appropriate infrastructure for the safe handling and containment of highly potent drugs, as well as the need for relevant analytical capabilities, particularly for highly powerful drugs, and proper project management (that includes formal induction, running, and completion).
• According to the EFPIA (European Federation of Pharmaceutical Industries and Associations), data reported the yearly growth rate of pharmaceutical research and development expenditures in Europe between 2007 and 2021. Between 2017 and 2021, the European pharmaceutical industry's R&D spending increased by 4% yearly. The significant R&D expenditure by pharmaceutical industries may represent the rise in innovations of CDMO.

North America is Estimated to hold a Major Market Share

• The scope of the services offered by contract manufacturing organizations (CMOs) in the United States has expanded over time to meet market and outsourcer demands. Initially, CMOs only offered basic manufacturing services. The country's pharmaceutical business is driven by the US pharmaceutical industry's consistent expansion and the rising outsourcing of large pharma companies concentrating on their core competencies to boost profit margins.
• The country's stringent regulations guarantee that the CMOs adhere to high manufacturing and finished goods standards. For instance, producing autologous or allogeneic medicines is difficult, and the manufacturing facilities must be GMP accredited.
• The United States Food and Drug Administration(FDA) in March 2022 outlined a plan for producers and developers to address medicine shortages. The guidance is meant to assist stakeholders in actively creating, maintaining, and implementing risk management plans (RMPs) to help avert shortages of human medicinal and biological products. RMPs can give stakeholders a framework for proactively identifying, prioritizing, and implementing mitigation measures for risks that could lead to supply disruptions. The FDA also suggests that risk concerns be considered when creating the RMPs' material.
• Canada's pharmaceutical business is among the best in terms of product innovation. The Canadian government supports the pharmaceutical industry, a significant part of the country's economy. The government offers a business-friendly climate for pharmaceutical firms and allows them to use assets for both short- and long-term business goals.
• Pharmaceutical firms nationwide are restructuring and searching for new business models based on external networks and third-party alliances due to the patent cliffs. This business strategy primarily focuses on outsourcing most functions, including manufacturing, which offers CMOs in this region good growth potential.

Competitive Landscape

The Pharmaceutical CDMO Market is fragmented, where several vendors contribute to the market share. The existence of numerous competitors in the market has an impact on service pricing, making it a direct source of competition, particularly for small-scale providers. The vendors in the examined market are anticipated to concentrate on offering one-stop-shop services to gain a competitive edge. The CMO with access to significant capital would be able to engage in these activities, which raises the bar for admittance for new players and enhances competition.

• March 2022 - Catalent and TFF Pharmaceuticals have entered into a collaboration agreement to develop, test, and produce dry powder formulations for biotherapeutic varieties using the proprietary Thin Film Freezing (TFF) technology of TFF Pharmaceuticals.
• February 2022 - Arranta Bio, a prominent advanced therapeutic CDMO, was acquired by Recipharm. The purchase is a crucial part of Recipharm's strategy to support innovative biologics drug developers with contract development and manufacturing services that are scientifically distinct.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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