The BMI report writes that falling productivity and patent expiries are placing increasing pressure on pharmaceutical companies to reduce fixed costs, including large manufacturing facilities. Sponsors are turning to CMOs in search of time and cost savings and as a way to flexibly manage outsourced manufacturing. Key players in the global, Chinese and Indian markets are BASF, Boehringer Ingelheim, DSM, Evonik, Fareva, Jubilant, Lonza, Patheon, and Wockhardt. Meanwhile, the threat of overcapacity combined with inevitable programme cancellations following mega-mergers resist the market.

Key findings from this BMI report are that: 1) the CMO market was worth US$22.2 billion in 2009 and will reach US$33.7 billion (Euros 22.4 billion) by 2014, with biopharmaceutical manufacturing being the fastest growing industry segment; 2) the sale of captive facilities, cost pressures, the rising number of products in development and the growth of the biopharmaceuticals industry are all driving the CMO market; 3) strategic outsourcing often entails establishing longer and deeper relationships with a limited number of providers, and many sponsors are selling their own facilities in order to reduce fixed costs; 4) North America leads the world in biomanufacturing, but Asia’s share of global biomanufacturing facilities is expected to double from 10% in 2009 to around 20% by 2013; and 5) outsourced manufacturing is shifting from established markets in the West to emerging markets in the East.

According to the BMI report, pharma’s pipeline includes an increasing proportion of biologicals and this, coupled to the predicted increase in the biosimilars market, will drive growth at CMOs. However, biologicals manufacturing has significantly higher barriers to entry in comparison with small molecules. Manufacturing biologicals requires more investment in infrastructure and is more complex, as highlighted by Genzyme’s difficulties scaling up from 160 L to 2,000 L bioreactors. Consequently, there are relatively few CMOs with biologicals capabilities, but BMI believes this must change, describing the development of biomanufacturing capacity as “a key imperative for CMOs in the future”.

The majority of the current biomanufacturing capacity is in North America, but Asia is the growth region. However, the report states that “most Asian CMOs still fail to demonstrate the rigor of regulatory compliance that Western companies demand and their customers expect”. This situation needs to improve, as do regulations in India and China. To fulfil their potential, India and China must implement stronger actions to control domestic supplies of raw materials and collaborate closely with foreign regulatory bodies. By undertaking these actions the countries can ensure they comply with Western manufacturing standards, which could be particularly important for the more complex process of producing biologicals.

References:
Taylor N. CMO market worth $33.7bn by 2014. In-Pharma Technologist. 2009 Nov 25.

The CMO Market Outlook: Emerging Markets, Key Players and Future Trends. Business Monitor International. 2009 Oct.