The role of CDMOs has changed dramatically over the past few decades. In the past, contract manufacturing was seen as an emergency service or a temporary resource to deal with staff shortages or technical problems. Today, however, pharmaceutical companies are outsourcing more and more of their research pipelines, treating suppliers as strategic partners to expand their capacity to explore new therapeutic targets, which is essential to help companies remain competitive, especially with the rise of biosimilars and generics.
The biologics market is expected to be worth more than USD 500 billion by 2030. Currently, biologics account for 46% of global pharmaceutical spending. However, 14% of these molecules already face competition from biosimilars, while a further 70% could face similar competition in the future.
Market growth for CDMOs and CROs
The ‘CPHI Trend Report – Global CDMO Trends: the outsourcing forecast 2024‘ highlights how pharmaceutical service providers such as CDMOs (contract development and manufacturing organisations) and CROs (contract research organisations) are becoming increasingly integrated and strategic for pharmaceutical companies.
Among the case studies, the report cites the significant example of the Bristol Myers Squibb (BMS) Research Centre in India, which is now the largest BMS research centre outside the US. This reflects the growing role of long-term partnerships between large pharmaceutical companies and CDMOs, particularly in research and development activities.
According to Sibaji Biswas, Chief Financial Officer of Syngene International Limited, large pharmaceutical companies are increasingly outsourcing significant parts of their discovery pipelines to trusted partners. As evidence of this trend, the CPHI paper cites some of the growth projections for this market:
The contract manufacturing market is expected to exceed $200 billion by 2032.
The market for contract research organisations is also booming, with an estimated growth of $63.35 billion between 2023 and 2028.
Strategic Partnerships
Peter Bigelow, president of xCell Strategic Consulting, points out that the relationship between service providers and drug sponsors has become a key component of pharmaceutical companies’ risk management and strategic planning. Partners are selected not only on the basis of their ability to manufacture a drug, but also on their ability to manage the entire product journey from discovery to commercialisation.
Anil Kane, executive director at Thermo Fisher Scientific, emphasises that CDMOs need to deliver transformational value to their partners that goes beyond simply providing services. Pharmaceutical companies today are not only looking for technical expertise, but also the ability to offer
- Access to advanced technologies.
- Critical data-driven insights.
- State-of-the-art materials.
- Innovative manufacturing processes.
This value proposition is what distinguishes successful pharmaceutical outsourcing partners. The increasing complexity of the pharmaceutical landscape and the need to meet expectations for speed and quality require these organisations to continue to innovate and maintain strong, trusted relationships with pharmaceutical companies.
Cyber Security
With the increasing digitalisation of processes and the growing interconnectedness of companies along the value chain, cybersecurity has become a top priority. Drug sponsors want to be sure that their outsourcing partners have robust cybersecurity measures in place to protect sensitive data, patient information and clinical trial results. The ability to prevent and manage potential cyber-attacks is seen as critical to building trust between pharmaceutical companies and their outsourcing partners.
Importance of ESG issues
Emerging outsourcing strategies reflect a growing emphasis on issues of environmental sustainability, diversity and inclusion. This represents a significant shift from the past, when the focus was almost exclusively on technical expertise. Today, pharmaceutical companies are looking for outsourcing partners with sustainable practices and a commitment to social responsibility, as well as robust governance systems. This means that CDMOs and CROs that excel at creating an inclusive and diverse work environment are seen as more attractive strategic partners.