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The pharmaceutical contract manufacturing market size is estimated to grow at a CAGR of 7.81% between 2022 and 2027. The pharmaceutical contract manufacturing market size is forecast to increase by USD 58 billion. The growth of the market depends on several factors, including the patent expiry and increasing demand for generic drugs, the growing need to focus on core competencies, and the strong research funding.
This pharmaceutical contract manufacturing market report extensively covers market segmentation by end-user (big pharmaceutical companies, small and medium-sized pharmaceutical companies, and generic pharmaceutical companies), service (api/bulk drug manufacturing, final dosage form, and secondary packaging), and geography (North America, Asia, Europe, and Rest of World (ROW)). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The patent expiry and increasing demand for generic drugs are notably driving the market growth, although factors such as the capacity utilization and constraints may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Patent expiry and increasing demand for generic drugs is the key factor driving the growth of the global pharmaceutical contract manufacturing market. Generic drugs are cheaper medicines with the same therapeutic safety and efficacy as the branded version. One of the main reasons for the expansion of the generic drug industry is the increasing pressure to reduce rising healthcare costs. With such cost savings in mind, governments around the world are encouraging the use of generic drugs. Expiration of various pharmaceutical patents is another important reason behind the expansion of the generic drug industry. In emerging nations such as South Korea, around 51 patents covering more than 150 pharmaceutical products are scheduled for termination in 2023.
Although the patent cliff has resulted in significant income and volume losses for the branded drug industry, patent expiration allows multiple cheaper generic equivalents to enter the market (which will boost the volume of drugs sold). This is a positive indication for industry expansion because generics companies outsource around 80% of their production to CDMOs. These factors are expected to drive the growth of the market during the forecast period.
One of the recent trends in the global contract manufacturing market is the increase in US FDA-approved manufacturing facilities in emerging markets. China and India are two key countries in the global contract manufacturing market. China's contract pharmaceutical manufacturing market has been limited to Contract Research Organizations (CROs) due to strict government regulations on CMOs. However, the market has witnessed a significant change since the country's State Council allowed drug Marketing Authorization Holders (MAH) to use third-party licensed manufacturers or CMOs in most regions of the country.
As a result, the market has witnessed an increase in the number of US FDA-approved facilities in the country. Various foreign pharmaceutical companies are outsourcing the manufacture of drugs to CMOs in the country, which is increasing the adoption of CMOs. Thus, an increasing number of US FDA-approved manufacturing facilities will drive the growth of the market during the forecast period.
Capacity utilization and constraints are major challenges to the growth of the global pharmaceutical contract manufacturing market. Utilization is a measure of actual production versus potential production at the company's maximum production capacity. Due to the complexity of the manufacturing process, it plays an important role in the production of various therapeutic agents, especially biological medicines. Approximately 35% of CMOs face minor constraints such as time, cost and resources at least at some stage of the manufacturing process, and an estimated 20% of CMOs face moderate to severe constraints during the manufacturing process. Such constraints associated with manufacturing are preventing CMOs from producing therapeutics at their full potential, which is causing delays in the launch of several therapeutics.
Additionally, the high cost of downstream cleaning further impedes CMOs from operating at optimal capacity. Factors such as the limited number of approved production sites also lead to capacity bottlenecks. Lack of new and experienced scientists, technical personnel, and production personnel. Lack of cheap disposable products. The limitations of advanced cell culture systems on upstream performance are also causing limitations in the market. Therefore, the above factors are expected to hinder the growth of the focus market during the forecast period.
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Pharmaceutical Contract Manufacturing Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Almac Group Ltd.: The company offers pharmaceutical contract manufacturing services such as diagnostic services, API services, and pharmaceutical development. Also, through this segment, the company offers solutions such as clinical trial solutions, supporting services, global laboratories, panels and assays, and claraT mRNA Report.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the big pharmaceutical companies segment will be significant during the forecast period. Big pharmaceutical companies is a term for the world's largest publicly traded pharmaceutical companies. The largest pharmaceutical companies may also have divisions that produce medical equipment. These companies are usually larger than companies that focus on medical devices alone.
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The big pharmaceutical companies segment was valued at USD 52.73 billion in 2017 and continue to grow by 2021. In this segmnet, pharmaceutical clients can extend their technical resources by outsourcing to a CMO without incurring more overhead. CMOs have become more significant in the pharmaceutical sector during the past 25 years. Moreover, the big pharmaceutical companies have also been prioritizing their efforts in their core competencies. Hence, they prefer not to use the existing tools, knowledge, and technology when creating the final dose of medications. Instead of producing the formulated drug to remain competitive in the market, pharmaceutical companies had to review their production techniques and R&D operations. This was due to growing competition and narrowing profit margins. Thus, such a partnership between big pharmaceutical companies and CMOs is expected to drive the growth of the global pharmaceutical contract manufacturing market through the big pharmaceutical companies segment during the forecast period.
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North America is estimated to contribute 41% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The pharmaceutical contract manufacturing market in North America is experiencing significant growth, driven by increasing demand for cost-effective and efficient drug manufacturing solutions. In recent years, there has been rapid growth in the number of new and innovative drugs entering the market. These drugs are often highly specialized and require specialized manufacturing processes that are not available in-house for pharmaceutical firms. This has led to an increasing dependence on CMOs that have the required expertise and facilities to manufacture these specialized drugs. Such factors will increase the market growth during the forecast period.
In 2020, COVID-19 adversely affected all countries in North America, especially the US. However, the pandemic positively impacted the pharmaceutical contract manufacturing market in North America. Thus, to meet the demand-supply gap with regards to pharmaceuticals in the region, the demand for pharmaceutical contract manufacturing increased significantly in 2020. This resulted in the significant market growth in 2020. The market is expected to register a positive growth rate during the forecast period, owing to the constant efforts to contain the spread of the disease.
The pharmaceutical contract manufacturing market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the global pharmaceutical contract manufacturing market as a part of the global pharmaceuticals market within the overall healthcare industry. The parent global pharmaceuticals market covers products and companies engaged in the R&D or production of generic drugs, non-generic drugs, and veterinary drugs. Our market research report has extensively covered external factors influencing the parent market growth during the forecast period.
Pharmaceutical Contract Manufacturing Market Scope |
|
Report Coverage |
Details |
Page number |
159 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 7.81% |
Market growth 2023-2027 |
USD 58 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
7.01 |
Regional analysis |
North America, Asia, Europe, and Rest of World (ROW) |
Performing market contribution |
North America at 41% |
Key countries |
US, Germany, UK, China, and India |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
AbbVie Inc., Almac Group Ltd., Baxter International Inc., Boehringer Ingelheim International GmbH, Cadila Pharmaceuticals Ltd., Charles River Laboratories International Inc., Cmic Holdings Co. Ltd., Dalton Pharma Services, Dr Reddys Laboratories Ltd., Grifols SA, Laboratory Corp. of America Holdings, Lonza Group Ltd., Lupin Ltd., Novotech Health Holdings, OPTIMAPHARM d.o.o., Parexel International Corp., PCI Pharma Services, Recipharm AB, Syneos Health Inc., and Thermo Fisher Scientific Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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