Market Trends of Pharmaceutical CMO Industry
Active Pharmaceutical Ingredient (API) and Intermediates are Expected to Witness Robust Demand
- The API manufacturing growth has consistently increased over the past few years. This will continue to rise steadily, with further patent expiries expected in the future and a significant increase in global generic production capacities. Most businesses in the sector emphasize creating biological APIs and boosting API production in the market under study. Compared to OTC medications, the general prescription pharmaceuticals subsegment has a higher need for API production.
- Increased government initiatives in the healthcare field, biologics innovation, and an increase in cancer and age-related disorders are just a few of the key reasons propelling the expansion of the API manufacturing market. However, the development of the business can be hampered by rigorous regulatory laws in places like Europe.
- The segment is expanding due to the rising importance placed on high-potency APIs. The cutting-edge technologies for HPAPIs can alter the in-out ratio of CMOs in this quickly growing market. Better prospects for CMOs are anticipated in the biopharmaceutical and small molecule API industries as the primary pharmaceutical firms continue to reduce their production.
- Companies are actively pursuing acquisition and expansion strategies to bolster API manufacturing, driving growth in the sector. For instance, in January 2023, an active pharmaceutical ingredient (API) production plant in Ringaskiddy, Ireland, was acquired by Sterling Pharma Solutions, a multinational contract development and manufacturing company from Novartis. Additionally, the deal includes an ongoing supply agreement with Novartis to continue to manufacture several APIs for cardiology, immunology, and oncology medications at Ringaskiddy. The facility will add capacity to Sterling's expanding API manufacturing capabilities. Financial information was kept private.
- The execution of a collaboration agreement for optimizing cell line productivity development to produce large volumes of anti-infective active pharmaceutical ingredients through precision fermentation was jointly announced by Willow Biosciences Inc. and SUANFARMA in October 2023. To develop a more cost-effective production process, SUANFARMA will have access to Willow's proprietary strain optimization technology through this partnership.
Understand The Key Trends Shaping This Market
Download PDF
North America is expected to Hold a Significant Share in the Market
- Contract manufacturing organizations (CMOs) in the United States have evolved from an initial offering of essential manufacturing services to a wide range of services to meet market and outsourcer demand. Steady growth in the US pharmaceutical industry and increasing outsourcing by major pharmaceutical companies focusing on their core competencies to improve profit margins drive the country's market.
- Stricter domestic regulations ensure superior manufacturing quality and final products that CMOs adhere to. For instance, manufacturing an autologous or allogeneic therapy is complex, and the manufacturing facility must obtain its GMP certification.
- The country has emerged as one of the largest drug markets, accounting for almost half of the R&D spending in pharmaceutical and biotechnology markets. Hence, CMOs play a critical role in this market and have invested in new facilities and technologies to cater to various outsourcers. The country is experiencing a shortage in manufacturing capability for specific sectors, like cell, peptide, and gene therapy. CMOs have increased their manufacturing bases over the past two years.
- The Canadian pharmaceutical industry is one of the most innovative in terms of products. Pharmaceuticals, a key sector of the Canadian economy, is supported by the Canadian government, which provides a business-friendly environment for pharmaceutical companies and can leverage assets for short- and long-term business strategies.
- Canada holds the advantage of having a skilled workforce. Although Canada is going to face intense competition from emerging Asian countries, the complex manufacturing processes required for certain drugs, which need skilled personnel, a stable political environment, and the proximity to end markets, such as the United States, are expected to drive the growth of the pharmaceutical CMO market in this region.
- Further, the recent regulation of cutting prices for prescription drugs is likely to affect the CMOs in terms of their margins. This long-term effect is expected to hamper the productivity margins of CMOs in the country. Contract service providers (CSPs) in Canada are ideal replacements due to the complex manufacturing processes for certain products and the proximity to the end markets in Canada and the United States.
Get Analysis on Important Geographic Markets
Download PDF
