by The Rise of Contract Pharmaceutical Manufacturing
Contract manufacturing has become a major part of the pharmaceutical industry in recent decades. There are a few key reasons for this growth. Firstly, many large pharmaceutical companies have found that outsourcing manufacturing can help reduce costs and allow them to focus on drug development and marketing. Setting up manufacturing facilities requires huge capital investments that not all companies are willing or able to make. Contract manufacturers are able to achieve economies of scale by serving multiple clients.
There is also the issue of capacity. Large pharmaceutical companies often experience peaks and troughs in demand for particular drugs over time. Maintaining excess in-house capacity to meet unexpected high demand does not make financial sense. Engaging contract manufacturers on demand allows pharmaceutical companies flexibility without under or over-utilizing their own facilities.
Regulatory requirements have also contributed to the rise of contract manufacturing. Compliance with current good manufacturing practices (cGMP) is essential but costly. Many smaller pharmaceutical firms find that partnering with specialized Contract Pharmaceutical Manufacturing able to invest heavily in quality systems offers a more viable compliance solution.
Key Services Offered
Contract manufacturing organizations (CMOs) offer a range of services to pharmaceutical clients. One of the most common is full drug product manufacturing, typically involving formulation development, tablet/capsule production, packaging and labelling. However, CMOs also offer component manufacturing services for active pharmaceutical ingredients (APIs), intermediates, sterile injectables and other dosage forms like creams, liquids and inhalers.
Additional services provided by CMOs include biologics drug substance and drug product manufacturing, laboratory testing and analytical services, microbiological testing and clinical trial material production. Some take on integrated services from drug development through to commercial production. Adapting production lines and changing over for different clients is another important capability CMOs provide.
Global Market Size and Outlook
The global Contract Pharmaceutical Manufacturing size was valued at over $100 billion in 2020 according to estimates. North America currently dominates the market, accounting for approximately 40% of revenue, followed by Europe. However, growth in emerging markets like Asia Pacific and Latin America has been strong.
The contract manufacturing market is expected to continue expanding at a healthy double-digit compound annual growth rate through to 2027 driven by both innovator and generic drug markets. The biologics segment in particular is anticipated to be a major source of future growth as biologic drugs become more prevalent.
Other industry analysts project the market reaching $150-200 billion by 2025 factoring in capacity expansion by CMOs. India and China are emerging as top locations for biologics as well as chemical API production due to lower costs of operation and a skilled workforce. Growth is forecast across all pharmaceutical dosage forms as more drug developers embrace outsourcing strategies.
Regulatory Compliance is Key
While offering significant benefits, outsourcing manufacturing does come with regulatory compliance risks that both clients and CMOs must effectively manage. CMOs are regularly inspected by the FDA and other agencies to ensure manufactures meet all applicable quality standards and anti-microbial limits. Any quality issues detected could impact multiple customers.
Having robust quality systems, standard operating procedures, supplier management programs and well-trained personnel is therefore paramount. CMOs must also adhere to cGMPs for design, maintenance and calibration of facilities and equipment. Adherence to data integrity guidelines is another focus area during inspections. Effective change control protocols are necessary as production lines are adjusted to suit different clients.
Ensuring an uninterrupted supply of medicines to patients is also a key concern. CMOs are expected to maintain business continuity plans, dual sourcing strategies and backup manufacturing sites where applicable. They work closely with clients on regulatory filings and post-approval variations or extensions to help guarantee supply. Demand forecasting accuracy, inventory and risk mitigation capabilities are assessed critically.
OutlookÂ
As drug development costs rise, timelines extend and patents expire, the trend toward outsourcing non-core functions like manufacturing looks set to continue expanding the contract pharmaceutical industry. In addition to capacity and financial benefits, CMOs also bring specialized technical expertise that assists pharmaceutical firms in navigating an increasingly complex regulatory landscape around the world.
While quality and compliance oversight will remain areas of focus, leading contract manufacturers are well invested in systems and personnel to assure regulators and sustain client trust. Overall, the future outlook is positive with CMOs seen playing an ever more prominent role in supplying medicines to patients globally. Constant innovation, expanded service offerings and capacity growth especially in biologics will fuel further market potential.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
