A Good Feeling ($$) About Contract Manufacturing

By Louis Garguilo, Chief Editor, Outsourced Pharma

Occasionally, we look at revenue numbers assigned to the collective activities we focus on at Outsourced Pharma: drug development and manufacturing outsourcing, and working with CDMOs.

First, admittedly, we do so for the “Wow factor.” It's nice to consider the sheer size and scope of our business market. It feels good to recognize how your individual efforts and responsibilities roll up to a global outsourcing industry.

Efforts and responsibilities such as when:

• during some morning, you (finally) receive confirmation of a successful batch release of material for your lead program – desperately needed for an upcoming clinical trial;
• that afternoon you (again) review with internal staff your fill-finish strategy, and the requirements for your new external provider;  
• and later that day you join (another) call during which your team negotiates with that CDMO for timely access to specific equipment for a scale-up of drug substance for a backup program.

Today, working within lean organizations we take on heavy, often multifarious, workloads.

So it can be a positive charge to contemplate how you are an integral part of a world full of individual efforts, ultimately bringing myriad drugs and therapies to patients around the world.

Your daily progress (and at times setbacks) serve in a global continuum of B2B operational and business models and partnerships.

Sponsors and CDMOs: A formidable team, creating an impressive market, against disease and suffering.

Second, by occasionally perusing market reports we can grasp directionality.

Will you be pursuing more or less of what you do now in the years to come? Will your company need to pivot? Will you need to acquire new skills?

And are your compatriot but competing outsourcers – be they emerging and specializing biotech start-ups, or Pharma with bigger pipelines – externalizing similar work and programs?

By The Numbers

With the above as segue, here are some recent indicators.

According to MarketsandMarkets, which Forbes has listed as a “best management consulting firm,” revenues for the global pharmaceutical contract manufacturing market were estimated at $176.5 billion in 2023.”

There's the raw "Wow factor."

Equally impressive, is the comparison: MarketsandMarkets informs me they estimate 2022 was around $164 billion, and our contract manufacturing market is poised to reach $258.3 billion by 2028, growing at a CAGR of 7.9% from 2023 to 2028.

There's the directionality.

According to the MarketsandMarkets report, “various elements, such as rising research activities and funding investments for generic medicines, technological advancements in CDMOs, the high cost of in-house drug development, and the regulatory filling support provided by CDMOs, are driving the market growth.” 

Here’s a good look (and nice explanation) at all that in a single chart from the report.

• Market growth in the Asia Pacific can be attributed to the presence of a large and growing patient population, increasing demand for innovative therapies, and the emergence of small and mid-sized pharmaceutical companies in the region.
• Growth in the pharmaceutical contract development and manufacturing market can mainly be attributed to the increasing drug R&D pipeline, technological advancements by CDMOs, and the high cost of in-house drug development
• The need for highly advanced facilities for developing complex cell and gene therapies and the emergence of hybrid models with CRO-CDMO partnerships are key opportunity areas for players in this market.
• The Asia Pacific market is estimated to witness the highest CAGR (9.0%) during the forecast period
• Globally, North America is the largest market for pharmaceutical CDMO services and this trend is expected to continue during the forecast period

One other chart I’ll bring you from the MarketsandMarkets report also speaks to the global dynamics of our industry.

What does it say to me as we sit her in the middle of 2024?

Effects of COVID, reshoring, “shrinking the supply chain” and the domestication of critical supplies, have not, in fact, much altered the global dynamics or worldwide reach of contract manufacturing outsourcing.

For me, that barely perceptible Middle East & Africa component in this chart is of some interest. A conjecture (despite current instability in parts of the region), is here we have the potential for more surprising growth over the next decade.

Perhaps I’m too heavily swayed by my recent three-part investigation (that starts here) on a development and manufacturing deal between a U.K.-based biotech developing vaccines, and the government of Saudi Arabia.

Otherwise, proportionally, we see the stalwarts (North America, Europe and Asio-Pacific) all growing, with Europe, in some regards, making more momentum (despite current instability in parts of that region).

Chances are, if you are looking for contract manufacturers in coming years, you’ll survey a global landscape of opportunities, and have to weigh a basket of risks as well.

And what this representative MarketsandMarkets report tells us is that you certainly won’t be undertaking that activity alone.

So feel satisfied you work in such an important industry, one ultimately focused on serving patients. It’s a good idea to raise your head up from your daily work every once in a while, and view the broad outsourcing mosaic. 

It’s good for the industry, and good for the soul.