Pharmaceutical CDMO Industry

The global pharmaceutical Contract Development and Manufacturing Organization (CDMO) market was valued at approximately USD 146.0 billion in 2023 and is projected to expand at a compound annual growth rate (CAGR) of 7.2% from 2024 through 2030. This growth is primarily fueled by rising investments from CDMOs aimed at expanding new drug development capabilities and meeting the increasing demand for novel therapies. Several factors underpin this upward trend, including escalating investments in pharmaceutical Research & Development, a growing demand for genetic drugs, the rising incidence of cancer and age-related disorders, and an expanding need for advanced therapeutic options.

Additionally, increased demand for biosimilars, biologics, personalized medicine, orphan drugs, companion diagnostics, and adaptive trial designs is anticipated to further drive the CDMO market. As pharmaceutical companies explore innovative treatment avenues, the need for compliance with stringent regulatory standards intensifies, prompting higher demand for specialized CDMO providers who can effectively manage contract development and manufacturing responsibilities.

Key initiatives in the sector also contribute significantly to market expansion. For example, in January 2022, Lonza entered a partnership with HaemaLogiX, a company specializing in monoclonal antibody development, to produce KappaMab, a myeloma drug candidate. Furthermore, in December 2023, Innovent Biologics, Inc. extended its licensing agreement with Synaffix B.V., part of Lonza, to advance their clinical-stage platform technology for antibody-drug conjugates (ADCs) that exhibit a superior therapeutic index. These biopharmaceutical collaborations underscore the momentum driving the growth of the pharmaceutical CDMO sector.

Within many pharmaceutical companies, the emphasis on innovation and swift progression to clinical trials remains paramount. Small and specialty pharmaceutical firms increasingly rely on third-party service providers to fulfill these critical needs. Many Contract Research Organizations (CROs) and CDMOs now offer comprehensive, one-stop-shop solutions, managing all stages from Active Pharmaceutical Ingredient (API) development to dosage form creation, encompassing the entire journey from early-stage development to product commercialization. To deliver these services effectively, CDMOs require an extensive suite of enabling technologies and specialized handling capabilities tailored to unique challenges. Despite the holistic services provided, there is significant variability in product design and development expertise among different CDMO players, which can be crucial for scaling product concepts and ensuring successful market entry.

Gather more insights about the market drivers, restrains and growth of the Pharmaceutical CDMO Market

Product Insights

Market Segmentation and Revenue Share:

• The market is segmented into two primary categories: Active Pharmaceutical Ingredient (API) and Drug Product.
• In 2023, the API segment led the market with the highest revenue share, capturing 81.20%.

API Segment Details:

• The API segment is further divided into Type, Synthesis, Drug, and Manufacturing sub-categories.
• Growth in this segment is driven by a variety of factors, including:
  • Diverse Formulations: CDMOs are creating various formulations to meet specific therapeutic needs.
  • Increased Demand for Manufacturing Processes: The rising need for efficient manufacturing processes is propelling growth in the API segment.
  • Customer Preference and Global Acceptance: A broad acceptance of CDMO services across regions contributes to segment growth.
  • Focus on New Drug Formulations: Many CDMOs are emphasizing innovative drug formulations, which further supports the API segment’s expansion.

API Sub-Segmentation by Type:

• Traditional APIs: This includes well-established active ingredients used in various therapies and is supported by advanced R&D and commercial production methods.
• Highly Potent APIs (HP-API) and Biologics/Large Molecules: These segments are specialized for more complex, targeted treatments.
• Growth Projections: The traditional APIs segment is expected to grow at a CAGR of 5.2% during the forecast period, driven by:
  • Increased R&D Activities in the pharmaceutical industry.
  • Rising prevalence of chronic diseases necessitating consistent supply of APIs.
  • Generics Adoption: Growing demand for generics boosts the requirement for traditional APIs.
  • Continued use of small molecules and other conventional active ingredients.

API Sub-Segmentation by Synthesis:

• Synthetic (Solid & Liquid) and Biotech: These two categories cater to different manufacturing and formulation processes.

Drug Segment Details:

• The drug segment is sub-divided into Innovative and Generics products, addressing a wide range of pharmaceutical needs.

Manufacturing Segment Details:

• This segment is split into Continuous Manufacturing and Batch Manufacturing.
• Continuous Manufacturing: Expected to grow at a high CAGR due to:
  • Increased Adoption: Continuous manufacturing processes are being rapidly adopted for their efficiency and scalability.
  • Pipeline Development: Many companies have a robust pipeline of drugs in development, increasing demand for efficient production methods.
• Pharmaceutical and biotech companies globally are outsourcing drug development activities to CDMOs, which has heightened the demand for continuous drug manufacturing to maintain competitiveness, especially amid economic uncertainties.

Drug Product Segment Growth:

• In 2023, the drug product segment is anticipated to exhibit strong growth throughout the forecast period.
• Demand Drivers:
  • Rising need for various dosage forms: Oral solids, semisolids, liquids, and others, catering to diverse treatment requirements.
  • Expanding R&D Pipelines: A growing number of drugs in the R&D stage is anticipated to positively impact market demand for drug products.
  • Increasing prevalence of chronic and infectious diseases worldwide, driving demand for new drug products across multiple therapeutic areas.

Order a free sample PDF of the Pharmaceutical CDMO Market Intelligence Study, published by Grand View Research.

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