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Pharma Tech Outlook | Wednesday, December 01, 2021
The CDMO industry is about to enter its most exciting phase, and while opportunities will abound, every industry member will need to be on top of their game in order to succeed in the long run.
Fremont, CA: Government actions to the COVID-19 pandemic, particularly those aimed at maintaining economic activity, have benefited the CDMO industry significantly. When the pandemic hit Europe and North America in March 2020, the biopharmaceutical industry and governments rushed to produce medicines and vaccines to reduce the virus's damaging effects and, eventually, stop it from spreading. Much of CDMOs' current biomanufacturing and injectable capacity was set aside for the pandemic response, and financing was made available to support even more capacity expansion. A number of CDMOs benefited directly from government and industry efforts through demand for development solutions and take-or-pay contracts for manufacturing capacity, and they have met or exceeded expectations.
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Expansion of the CDMO Industry
The CDMO business began 2021 with six companies with revenues over $1 billion and 11 companies with revenues ranging from $500 million to $1 billion, three of which may surpass $1 billion by the end of the year. Only two CDMOs had revenues of more than $1 billion at the start of the last decade, and only five had revenues of more than $500 million.
The industry, on the other hand, is far from mature. The industry may expect ongoing rapid expansion due to the explosion of the drug-development pipeline, record funding of nascent biopharma businesses, and massive new potential such as gene and cell therapies. Furthermore, it can't be considered to be consolidating because some of its biggest and strongest players, such Samsung Biologics and Fujifilm Diosynth, didn't even exist ten years ago.
Human capital will be a significant barrier for fast-growing CDMOs. The availability of qualified employees has received more attention in the industry and business press. For years, clinical research organizations (CROs) have been addressing this issue; they have invested extensively in recruiting and training clinical research experts, but they continue to see high turnover as experienced employees are recruited away. CDMOs will face comparable issues, and competition from global biopharma companies will likely exacerbate the problem and be costly for CDMOs in rapidly emerging categories like cell and gene therapy.
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