June 23, 2024
Biopharmaceutical CMO and CRO

The Rise of Biopharmaceutical Contract Manufacturing and Research

The biopharmaceutical industry has seen tremendous growth over the last few decades driven by advances in biotechnology and life sciences. With growing R&D costs and longer development timelines, biopharma companies are increasingly turning to Contract Manufacturing Organizations (CMOs) and Contract Research Organizations (CROs) to help expand their capabilities and accelerate drug development.

The Role of CMOs and CROs

CMOs and CROs play an integral role in the biopharma value chain by providing specialized services to drug developers. CMOs help with manufacturing of biologics, vaccines and other complex therapies on a contract basis. They provide biopharma companies access to sophisticated manufacturing infrastructure and expertise without having to make large capital investments. On the other hand, CROs assist in various aspects of the drug development life cycle including preclinical and clinical research, regulatory support, and clinical trial management. They allow biopharma sponsors to outsource resource-intensive activities and gain efficiencies.

Growth Drivers for the CMO/CRO Industry

There are several factors driving the increased demand for CMO and CRO services from the biopharma sector:

Rising R&D Costs

– The cost of developing a new drug has risen substantially over the past decade to over $2.6 billion according to a recent industry report. Outsourcing non-core functions to experts is helping biopharma companies reduce R&D costs and development timelines.

Pipeline Growth of Complex Therapies

– Biologics, cell and gene therapies are the future of medicine but come with significant technical challenges in development and manufacturing. CMOs and CROs provide the specialized expertise, infrastructure and capacity required to produce these next-generation therapies.

Late Stage Pipeline Bottlenecks

– Capacity constraints at large pharma firms have led to bottlenecks in late stage development and commercial manufacturing. CMOs are playing a key role in alleviating these constraints and helping get new medicines to patients faster.

M&A Integration Challenges

– Pharma mergers often result in underutilized manufacturing assets and overlaps in in-house functions. CMOs help optimize capacity utilization and reduce redundancies post M&A.

Focus on Core Competencies

– Most biopharma companies now see research, development and commercialization as core and are open to outsourcing non-core functions for better strategic focus. This has driven increased use of CMO/CRO partnerships.

Regional Capacity Needs

– Growth in clinical trials and bioproduction in emerging markets like Asia has surged demand for local CMO/CRO presence to address specific regional or country requirements.

Biopharmaceutical Contract Manufacturing Landscape

The biopharma CMO industry has consolidated significantly over the past 10 years. Today, just a handful of large pure-play CMOs dominate the market including Lonza, Boehringer Ingelheim, Samsung Biologics, Fujifilm Diosynth Biotechnologies and Thermo Fisher. These CMOs have made multibillion-dollar investments to build world-class biomanufacturing facilities with large production capacities. They offer clients integrated services from cell line development to fill/finish and have the capabilities to produce a wide array of modalities from monoclonal antibodies to gene therapies and vaccines.

In addition, many large pharma firms have built their own CMO divisions to leverage underutilized assets and expand service offerings. Examples include Catalent, Recipharm, Olon and Patheon (part of Thermo Fisher). Regional CMOs have also emerged with specialized services for the Asian, European and Latin American markets. The CMO industry is estimated to be worth over $35 billion currently and is projected to grow at a robust 9-10% CAGR over the next five years.

The Biopharma CRO Landscape

The Biopharmaceutical CMO And CRO landscape remains highly fragmented compared to CMOs, though consolidation has been rising. The top players include IQVIA, Syneos Health, PRA Health Sciences, Labcorp Drug Development, and Charles River that dominate global phase II-IV clinical trials. These mega-CROs have expanded service offerings through strategic acquisitions to provide integrated solutions across the value chain from discovery to commercialization.

Mid-sized CROs focusing on specialized niche services or regional markets are also growing rapidly. Service areas seeing strong demand include regulatory consulting, real-world evidence (RWE) generation, analytics, and commercialization support functions like market access and patient engagement. The biopharma CRO sector is estimated at $50 billion currently and growing at a rapid pace driven by exponential clinical trial volumes globally.

Outsourcing Trends Going Forward

While in-house R&D will remain core for innovative biopharma firms, outsourcing of non-core functions to expert partners is set to rise substantially over the coming years. The emphasis will increasingly shift towards strategic partnerships rather than traditional transactional relationships. CMOs and CROs are making the necessary investments in flexible, multi-product manufacturing platforms and digital technology solutions to support platform business models and data/AI driven services. With the ongoing innovation in complex modalities, the importance of experienced industry partners for de-risking the development and commercialization process will only increase. The CMO/CRO industry is thus well-poised for continued strong growth going forward as a key enabler of the biopharmaceutical value chain.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it