February 24, 2024

The Growing Contract Pharmaceutical Manufacturing Industry Is Driven By Cost Savings

Contract pharmaceutical manufacturing has been gaining significant popularity over the years as more pharmaceutical companies prefer outsourcing their production activities in order to achieve cost savings. Outsourcing drug manufacturing allows pharmaceutical companies to focus on drug discovery and development activities rather than worrying about production facilities, equipment and workforce management. It also helps them reduce production costs substantially by leveraging the economies of scale of large Contract Manufacturing Organizations (CMOs). CMOs offer integrated services from drug development and manufacturing to packaging and distribution at competitive prices due to their efficient use of advanced technologies and expertise.

The global Contract Pharmaceutical Manufacturing Market is estimated to be valued at US$ 101.45 Mn in 2023 and is expected to exhibit a CAGR of 9.3% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:
One of the major trends driving the contract pharmaceutical manufacturing market is the increasing adoption of single-use technologies by CMOs. Single-use technologies help reduce the risks of cross-contamination, simplify validation processes and enable flexible production runs. Their use eliminates the need for extensive cleaning of bioprocess equipment, thus allowing for faster manufacturing turnaround times. Several top CMOs have made investments in single-use technologies in recent years to keep up with the growing demand from biopharma companies. For example, Catalent Inc. acquired Juniper Pharmaceuticals in 2022 to expand its single-use technology offerings for drug development and manufacturing.

Porter’s Analysis

Threat of new entrants: The threat of new entrants is moderate as large capital investments and regulatory compliances pose entry barriers. However, opportunities remain for virtual CMOs with flexibility.

Bargaining power of buyers: The bargaining power of buyers is high as manufacturing capacities are widely available. Buyers can choose from a wide range of CMOs based on capabilities and pricing.

Bargaining power of suppliers: The bargaining power of suppliers is moderate as key raw material suppliers have established themselves. However, market remains fragmented with availability of local and global suppliers.

Threat of new substitutes: Threat of substitutes is low as complex drug manufacturing requires specialized expertise and facilities. However, opportunities remain for disruptive technology solutions.

Competitive rivalry: Competition remains intense among top players to gain market share and add new clients with capabilities in specialty drugs and complex manufacturing.

Key Takeaways

The global Contract Pharmaceutical Manufacturing market growth is expected to witness high. North America is expected to dominate the market over the forecast period owing to established pharmaceutical industry, presence of leading global players and outsourcing trend. Europe and Asia Pacific are also growing fast driven by increasing generic manufacturing in the regions.

Regional analysis: North America is the largest contract pharmaceutical manufacturing market led by the US. Europe is the second largest market dominated by Germany, UK and France. Asia Pacific is witnessing rapid growth with many global pharmaceutical companies setting manufacturing facilities in India and China to leverage low costs.

Key players: Key players operating in the Contract Pharmaceutical Manufacturing are Accenture plc, Cognizant Technology Solutions, ATOS SE, Catalent, Inc., Covance, Inc., Boehringer Ingelheim GmbH, Genpact Limited, Lonza Group, PAREXEL International Corporation, Quintiles Transnational Corporation, Abbvie, Inc., Baxter International Inc., Dr. Reddy€TMs Laboratories Ltd., Aurobindo Pharma, Pfizer, Inc., The Almac Group, Teva Pharmaceutical Industries Ltd. and Piramal Enterprises Ltd. Leading players are expanding their capabilities across regions through partnerships and acquisitions to enhance capacities for specialized manufacturing and technologies

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it