Key Trends Observed in the Top CDMO Companies

1. Key Trends Observed in the Top CDMO Companies In the last ten years, the pharmaceutical sector has seen fast growth in outsourcing services. This has largely been propelled by reasons such as rising API complexities, the need to optimize costs, and the development of small molecules. Contract Development and Manufacturing Organization (CDMOs) give biologic and pharmaceutical companies the independence to focus on their own internal capacities and improve process efficiencies. Large pharma companies are determined to de-risk R&D endeavors and boost their critical drugs’ speed to market while lowering their manufacturing and development costs. A rising number of biotech and specialty companies depend on service providers to evade soaring in-house development costs, the skill needed to drive molecules through clinical development, and manufacturing capabilities. Growing complexity in the expansion of New Molecular Entities (NMEs) has produced a need for unique competencies and capabilities that pharma firms prefer to get from outside instead of incorporating in-house. The outsourcing trend in drug discovery is not going to disappear anytime soon. Here are some of the key trends that we might see in the top CDMO companies in the near future: Mergers and acquisitions: A few years back, the market saw substantial consolidation as Clinical Research Organizations (CROs) and CDMOs reinforced their magnitude and capacity. Such reinforcement in the form of mergers and acquisitions can obscure the process of keeping track of CMO functions. Particularly as biologics and pharmaceutical manufacturers often collaborate with several external partners. In an effort to increase speed, offer integrated services, strengthen efficiencies, and develop worldwide networks, mergers & acquisitions in the CDMO space is growing. Private equity is playing a part in M&A in the industry, aiding smaller firms accomplish their goals. Others are looking to expand their reach or add specialized technologies that empower them to provide pioneering solutions. Also, the conversion of contract firms to CDMOs continues to be a driver. More drug companies are looking for strategic alliances to shrink their contact base while preserving a worldwide reach and access to technologies they need. With this imminent swing, CMOs will have to prove their worth through capacity and performance to keep their market share. Growth of small molecules: Today, a major share of pharmaceutical revenues is held by small molecule drugs. Even with an oversupply of new biologic units, the sector is largely dependent on small molecules, with a burgeoning clinical pipeline and a maximum number of FDA approvals. Small molecules dominate FDA approvals and close to 70% of NMEs approved were small molecules in the last five years. The trend of outsourcing small molecule will continue to grow in the future as firms streamline their production footprint.

2. Declining Research & Development and Innovation: With the rising number of drug approvals, returns from R&D for large pharmaceutical firms are witnessing a decline. With R&D shifting to biopharma, there has been a growth in firms that contract out clinical development to de-risk R&D endeavors. Also, irrespective of company size, pharma R&D channels continue to be dynamic. To be successful in a fast-changing ecosystem, R&D firms need manufacturing and development capabilities to be flexible and agile. However, the elevated fixed cost associated with internal capabilities restricts their capacity to scale up or down based on the nature and size of their channel and its ever-changing needs. CDMOs offer this agility and flexibility to the pharma industry. Corporations spend a fortune on R&D to produce superior drugs at fair costs and so premeditated use of CDMO partners grants firms a significant leg-up over competitors. Mounting Need for Ideal Partnerships Pushes Consolidation: In the pharma industry today, speed-to-market and innovation are very important. Pharmaceutical firms are strengthening their supplier support and choose to work with CDMOs that provide services across drug product and drug substance manufacturing and development. To fulfil this need, CDMOs help them broaden their capabilities across stages of commercialization and development to serve customers end-to-end and do away with the need for technology transfer. A key growth driver for firms in the CDMO space is their capacity to provide dedicated services throughout the drug lifecycle. Outsourcing today has grown into a strategic function. Working with a fixed number of partners helps enterprises to optimize costs, fast-track products to market, increase agility, and cut complexity while making sure that these partners concentrate on investing capital to fulfil their future needs.