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Contact manufacturing ‘is changing the industry’, report finds

Published on 13/10/15 at 11:09am
manufacturing China
Increasing competition from countries including China have forced changes to the contract manufacturing industry

The global market for pharma and biopharma contract manufacturing is expected to reach more than €332.7 billion by 2018, according to new research.

The report by BCC Research also found the sector is set to register a steady compound annual growth rate (CAGR) of 9.1%. According to BCC Research, OTC drugs and nutraceuticals, the largest segment in the contract manufacturing market, was worth €107.7 billion in 2012 and is expected to reach €170.7 billion in 2019.

The global market for pharmaceutical contract manufacturing is set for continued growth due to the escalating burden of patent expiries of major drugs, stringent regulations, increased competition, shrinking margins and strong pricing pressures.

The contract manufacturing business, which began on a fee-for-service model, has turned into a strategic partnership business. However increasing competition from emerging markets, particularly India and China, have forced major CMOs to adopt technological innovations aimed at improving the bioavailability and efficacy of drugs, making outsourcing more attractive to pharmaceutical companies.

In response, drug manufacturers are therefore increasing their outsourcing budgets and CMOs are developing capabilities and expanding their capacity to fulfil the needs of their clients, the report highlights.

It concludes that merging of CMOs is taking place in the form of strategic alliances, acquisitions and divestures which is being led by an increasingly ageing population, a rise in numbers of chronic diseases, growing demand for biologics, patents and an increasing interest in the development of biosimilars.

Similar issues are occurring in the contract research industry, which is also facing the challenge of creating new therapies to address global health issues. Drug development is becoming an increasingly expensive and difficult task due to strict regulations, and new technological challenges. The use of contract research organisations (CROs) is there gaining in popularity as a means of reducing drug development costs.

Yasmita Kumar

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