Pharmaceutical CMO Market Size (2024 - 2029)

Pharmaceutical CMO Market Analysis

The Pharmaceutical CMO Market size is expected to grow from USD 161.31 billion in 2023 to USD 217.09 billion by 2028, at a CAGR of 6.12% during the forecast period (2023-2028).

As a result of the rising demand for generic medicines and biologics, the capital-intensive nature of the business, and the complex manufacturing requirements, many pharmaceutical companies have identified the potential profitability in contracting with a CMO (contract manufacturing outsourcing) for both clinical and commercial stage manufacturing.

• The most significant factor driving the growth of CMOs in the pharmaceutical industry is the growing need for state-of-the-art processes and production technologies, which have proven significantly effective in meeting regulatory requirements.
• CMOs are consolidating as a means of enhancing profitability in the competitive market. The large CMOs could expand their geographical presence and penetrate multiple markets through consolidation. For instance, in January 2020, South Korea's Celltrion, a biosimilar maker, announced plans to invest USD 514 million over five years for its new plant in Wuhan, China's most extensive biologics facility with a capacity of 120,000 liters. The new facility is designed to develop and manufacture its biologics for the local market and perform contract work for Chinese biotech companies' emerging wave.
• Additionally, the pharmaceutical companies have been directing their priorities toward the core areas of competency. Hence, they prefer not to dispense available resources, expertise, and technology in formulating the final dose of medicines. The increased competition and shrinking profit margins compelled the pharmaceutical companies to revisit their production processes and R&D activities instead of manufacturing the formulated drug to stay competitive in the market.
• With the ongoing growth in the pharmaceutical sector, particularly after the Covid-19 pandemic, pharmaceutical innovator companies need to stock their pipelines with new drugs. However, they do not have the resources to discover, develop, and manufacture products. Hence, the requirement for CMOs is quite significant.
• Further, the countries such as China, India, and Japan hold a significant share of the pharmaceutical CMO market, owing to low labor costs, low capital and overhead costs (compared to that of the United States and Europe), tax incentives, and undervalued currency combine that provides a significant cost advantage for pharmaceutical companies outsourcing to these countries.
• The most significant factor boosting the growth of CMOs in the pharmaceutical industry in the Asia Pacific region is the growing need for robust processes and production technologies, which have proven highly effective in meeting regulatory requirements.
• The outbreak of COVID-19 positively impacted the market as pharma companies suddenly were faced with the challenge of producing the many millions of vaccine doses that would likely be needed. Many companies such as Pfizer and AstraZeneca transferred non-COVID-19 biologics out of their proprietary manufacturing networks to make room for the new vaccines. Due to compressed timelines and manufacturing scaling challenges for the COVID-19 vaccines and medicines, CMOs signed contract manufacturing service agreements at an unprecedented rate with the onset of the pandemic.

Pharmaceutical CMO Industry Segmentation

Contract manufacturing is outsourcing, where a manufacturer enters a formal agreement with another manufacturing firm for its parts, products, or components. The former manufacturer uses these in its manufacturing process for manufacturing its products. A contract manufacturing organization (CMO) is an organization that serves the pharmaceutical industry and provides clients with comprehensive services, from drug development to manufacturing. Outsourcing to a CMO allows pharmaceutical clients to expand their technical resources without increased overhead. The client can manage its internal resources and costs by focusing on the core competencies and high-value projects while reducing or not adding infrastructure or technical staff.

The Pharmaceutical Contract Manufacturing Organization (CMO) Market is segmented by Service Type (Active Pharmaceutical Ingredient (API) Manufacturing (Small Molecule, Large Molecule, High Potency API (HPAPI)), Finished Dosage Formulation (FDF) Development and Manufacturing (Solid Dose Formulation (Tablets), Liquid Dose Formulation, Injectable Dose Formulation), Secondary Packaging), by Geography (North America (Segmentation by Service Type, Segmentation by Country (United States, Canada)), Europe (Segmentation by Service Type (Segmentation by Country (United Kingdom, Germany, France, Italy, Rest of Europe)), Asia-Pacific (Segmentation by Service Type, Segmentation by Country (China, India, Japan, Australia, Rest of Asia-Pacific)), Latin America (Segmentation by Service Type, Segmentation by Country ( Brazil, Mexico, Argentina, Rest of Latin America)), Middle East and Africa (Segmentation by Service Type, Segmentation by Country (United Arab Emirates, Saudi Arabia, South Africa, Rest of Middle East and Africa))). The market sizes and forecasts are provided in terms of value in USD billion for all the segments.