June 19, 2024
Healthcare CMO Market

The healthcare industry has witnessed tremendous growth over the past few decades and continues expanding rapidly to cater to the increasing healthcare needs globally. Contract manufacturing organizations (CMOs) provide drug development and manufacturing services to pharmaceutical and biotechnology companies which help reduce development costs and improve efficiencies. CMOs also eliminate the need for companies to maintain large in-house manufacturing capabilities which allows them to focus on their core competencies of drug discovery and clinical research. There has been a significant increase in pharmaceutical companies outsourcing their manufacturing activities to CMOs such as tablet and capsule production, lyophilization, sterile filling, packaging etc. The global Healthcare CMO Market is estimated to be valued at US$ 507.46 Mn in 2024 and is expected to exhibit a CAGR of 5.4% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights. Market key trends: One of the key trends driving growth of the healthcare CMO market is the increasing demand for biosimilars and biologics. Biologic drugs have revolutionized treatment for various critical diseases however they are also expensive to develop and manufacture. To make these drugs more affordable, biosimilar development has increased significantly in past years through outsourcing to CMOs which provide expertise and infrastructure for biologics manufacturing. Many big pharmaceutical companies are partnering with CMOs for biosimilar development to commercialize cost-effective biologics and expand patient access. This is expected to boost the healthcare CMO market substantially over the forecast period. Porter’s Analysis Threat of new entrants: The healthcare CMO market requires high initial capital investment which makes the threat of new entrants moderate. Bargaining power of buyers: The bargaining power of buyers is moderate as there are many established players in the market. Bargaining power of suppliers: Suppliers have low bargaining power due to availability of substitutable raw materials. Threat of new substitutes: Threat of new substitutes is low as the market offers specialized services with high customer switching costs. Competitive rivalry: The competitive rivalry is high among the key players to gain higher market share. Key Takeaways The global Healthcare CMO Market Growth is expected to witness high growth over the forecast period. The global Healthcare CMO Market is estimated to be valued at US$ 507.46 Mn in 2024 and is expected to exhibit a CAGR of 5.4% over the forecast period 2024 to 2031. Regional analysis North America dominates the healthcare CMO market currently due to presence of major players and high adoption of advanced technologies. Asia Pacific is expected to grow at the fastest rate owing to rising healthcare expenditure and growth of pharma industry in the region. Key players Key players operating in the healthcare CMO market are FMC Corporation, BASF SE, Bayer AG, Sumitomo Chemical Co., Ltd., Syngenta AG, Adama Agricultural Solutions Ltd., UPL Limited (previously United Phosphorus Limited), Nufarm Limited, Tagros Chemicals India Ltd., Heranba Industries Limited.

The healthcare CMO (contract manufacturing organization) provides outsourced services related to manufacturing of pharmaceuticals, biologics, medical devices, and advanced therapies. Services include process development, manufacturing, analytical development, fill/finish, and packaging. The market is witnessing growing adoption of outsourcing strategy by pharmaceutical and biotech companies to reduce costs and focus on core functions. Additionally, rising demand for cell and gene therapies as a curative option for various conditions is driving clinical trial activities, in turn, boosting requirement for specialized manufacturing capacities.

The global healthcare CMO Market is estimated to be valued at US$ 507.46 Mn in 2024 and is expected to exhibit a CAGR of 5.4% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:

One of the key drivers for the healthcare CMO market growth is the growing outsourcing trend seen across the pharmaceutical industry. Manufacturers are outsourcing various non-core operations like manufacturing, labeling, and packaging to contract service providers in order to reduce costs and focus on drug development. This is allowing companies to achieve efficiency and optimize resources. Additionally, the development of advanced cell and gene therapies, as mentioned in the heading, has created demand for specialized manufacturing facilities and technologies, providing opportunities for CMOs to support clinical stage companies and accelerate therapy development. However, maintaining quality and compliance to regulatory standards remains a key challenge for CMOs due to complex nature of treatments and stringent guidelines.

Segment Analysis

The healthcare CMO market is dominated by the pharmaceutical segment which holds more than 60% share of the overall market. Within pharmaceutical segment, small molecule contract manufacturing dominates over large molecule contract manufacturing. This is because developing small molecule drugs is less complex and requires relatively lesser capital investments as compared to large molecule drugs.

PEST Analysis

Political: The governments across major countries are increasing healthcare expenditure to improve access and treatment outcomes. This is generating higher demand for affordable medicines which is positively impacting the healthcare CMO market.
Economic: Rising incomes and expanding health insurance coverage is driving higher spending on medicines. This is propelling the demand for affordable generic and biosimilar drugs produced via contract manufacturing.

Social: Rapid growth of aging population worldwide is increasing prevalence of chronic diseases like cancer, cardiovascular, diabetes etc. This is augmenting the need for medicines across therapeutic classes.
Technological: Advancements in areas like process analytical technology, continuous manufacturing, and automation are helping CMOs deliver high quality drugs at competitive costs in shorter timelines. This is attracting more outsourcing from pharmaceutical companies.

Key Takeaways

The global Healthcare CMO Market Growth  is estimated to be valued at US$ 507.46 Mn in 2024 and is expected to exhibit a CAGR of 5.4% over the forecast period 2024 to 2031.

Regional analysis shows that North America dominated the market in 2024 with over 30% share however Asia Pacific region is poised to become the fastest growing market during the forecast period. Rising biosimilars requirements, increasing outsourcing by big pharmaceutical firms, and growing acceptance of contract manufacturing in emerging nations are propelling the growth. This is primarily attributed to factors like rising pharmaceutical manufacturing in countries like India and China attributable to their large generic drugs market and expanding biologics manufacturing base. India is also attracting significant outsourcing and FDI as drug makers look to leverage the wide cost advantages in the region.

Key players

Key players operating in the healthcare CMO market are FMC Corporation, BASF SE, Bayer AG, Sumitomo Chemical Co., Ltd., Syngenta AG, Adama Agricultural Solutions Ltd., UPL Limited (previously United Phosphorus Limited), Nufarm Limited, Tagros Chemicals India Ltd., Heranba Industries Limited.

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