HPAPIs and biologic manufacturing present strong growth opportunities for CMOs
Providing value added development services will allow participants to edge out competition, finds Frost & Sullivan's Transformational Health team.
The global contract manufacturing organization (CMO) market is transforming to leverage changes in the pharmaceutical industry. Pharmaceutical companies continue to gain financially and overcome marketplace challenges, source innovative ideas, processes, skills and technologies by outsourcing to CMOs. However, the "vendor approach" model is not generating optimal results for the CMO industry. Expanding services into early stage drug development, complex technology transfer contracts, and flexible capacity supply agreements will enable CMOs to create a "transformational partnership approach" model with pharmaceutical companies.
Global Pharmaceutical Contract Manufacturing Organization (CMO) Market is part of Frost & Sullivan's Life Sciences Growth Partnership Service program, which also includes insights on contract research, biosimilars, orphan drugs, generics, immuno-oncology therapeutics, regenerative medicines, pharmaceutical regulatory landscape and market access.
"In addition to cost benefits and the freedom to focus on core competencies, outsourcing will allow pharma companies to optimize manufacturing capacity utilization rates as blockbuster drugs come off patent," said Transformational Health Program Manager Unmesh Lal. "Several CMOs are already repositioning themselves from low- to high-margin formulation manufacturers in order to attract crucial upstream and downstream biopharma processing operations."
CMOs need to enhance their technical capabilities and amend business models to access the huge market. Along with early-stage of drugs, CMOs must explore opportunities in virtual biotech, out-licensing, and risk sharing business models with clients. Expanding services into biologics and biosimilars manufacturing as well as high-potency active pharmaceutical ingredient (HPAPIs) will present enormous growth opportunities. The challenges lie in the reservations of biopharma companies regarding breach of patent and IP information, concerns regarding the loss of manufacturing control, the stickiness of the CMO business, and the existing, expanding in-house manufacturing capacity of big pharma. Further, personalized therapy products outsourcing is not as attractive for large-scale CMOs.
"To strengthen their position and integrate into the value-chain of pharmaceutical companies, CMOs are turning into one-stop-shop contract development and manufacturing organizations (CDMOs) to provide value-added services," noted Lal. "Increasingly focusing on pre-clinical development services, CDMOs can then transition from clinical services to offering commercial manufacturing."
The global CMO market will also see more consolidation as participants look to inorganic growth strategies to offer integrated solutions to customers. For instance, Patheon, Catalent and AMRI have acquired IRIX Pharmaceuticals, Pharmatek and Euticals respectively. They have been aggressive in expanding their product/services/capabilities through strategic alliances. Similarly, Aenova maintained its market position after the acquisition of Haupt Pharma AG and by selling its Temmler business in 2015. Both Fareva and Famar have successfully adopted an integration strategy of acquiring manufacturing facilities in Europe from large pharmaceutical companies.
Therefore, the emerging CDMO business model, transformation in the pharmaceutical ecosystem, disruptive drug development and manufacturing technologies, and major growth opportunities in high potency and biopharmaceuticals manufacturing are driving differentiation strategies for the long-term profitability of CMOs.
Related News
-
News US BIOSECURE Act passed by US House of Representatives
The controversial act, which has already impacted several foreign companies operating in the US, was passed by the House of Representatives on September 9, 2024. It is now headed for the US Senate before it can be signed into law by President Joe Biden... -
News Pharma Supply Chain People Moves
The latest appointments, promotions, and structural changes across the pharmaceutical supply chain. -
News Drug prices agreed upon as part of the US Inflation Reduction Act
The Inflation Reduction Act brought into constitution by the Biden administation in 2022, which proposed a drug price negotiation between the government and pharmaceutical companies, has reached it's first agreement. -
News BIOSECURE Act continues to loom over Chinese pharma manufacturers
With the US BIOSECURE Act on its way to passing into legislation, Chinese companies are facing declining revenues within the first half of 2024 as US pharmaceutical and healthcare companies pull their businesses from the country. -
News Ophthalmologic drug product Eylea faces biosimilar threats after FDA approvals
Regeneron Pharmaceutical’s blockbuster ophthalmology drug Eylea is facing biosimilar competition as the US FDA approves Biocon’s Yesafili and Samsung Bioepis/Biogen’s Opuviz. -
News ONO Pharmaceutical expands oncology portfolio with acquisition of Deciphera
ONO Pharmaceutical, out of Japan, is in the process of acquiring cancer-therapy maker Deciphera Pharmaceuticals for US$2.4 billion. -
News First offers for pharma from Medicare drug price negotiations
Ten high-cost drugs from various pharma manufacturers are in pricing negotiations in a first-ever for the US Medicare program. President Biden’s administration stated they have responded to the first round of offers. -
News Eli Lilly’s Zepbound makes leaps and bounds in weight-loss drug market
In the last week, Eli Lilly has announced their partnership with Amazon.com’s pharmacy unit to deliver prescriptions of Zepbound. Zepbound has also surpassed Novo Nordisk’s Wegovy for the number of prescriptions for the week of March 8.&nbs...
Position your company at the heart of the global Pharma industry with a CPHI Online membership
-
Your products and solutions visible to thousands of visitors within the largest Pharma marketplace
-
Generate high-quality, engaged leads for your business, all year round
-
Promote your business as the industry’s thought-leader by hosting your reports, brochures and videos within your profile
-
Your company’s profile boosted at all participating CPHI events
-
An easy-to-use platform with a detailed dashboard showing your leads and performance