Biologics Contract Development and Manufacturing Organization (CDMO) Market

Market Overview

The global biologics contract development and manufacturing organization (CDMO) market was valued at USD 12.54 billion in 2022. It is estimated to reach USD 32.89 billion by 2031, growing at a CAGR of 11.31% during the forecast period (2023–2031). The global CDMO market penetration rate is increasing steadily, driven by increasing drug development and manufacturing outsourcing by pharma and biotech companies and ongoing divestment of non-core manufacturing facilities, adding capacity and new outsourced products to the sector.

A biologics contract development and manufacturing organization provides pharmaceutical companies with development and manufacturing services for biological medicinal products. This form of CDMO may specialize solely in developing and manufacturing biologics or provide these services for small-molecule drugs.

Biologics contract development and manufacturing organizations (CDMOs) are often partnered with pharmaceutical companies that have recognized the need for a new biological or medical product, also known as biopharmaceutical or biologic. Some biologic CDMOs focus on supporting certain bottlenecks in the development process. In contrast, full-service biologics CDMO companies can manage drug development and manufacturing steps.

Market Dynamics

Global Biologics Contract Development and Manufacturing Organization (CDMO) Market Drivers

Access to New Technologies and Higher Speed of Execution Realized by CDMOs

Pressure on reducing supply chain length and improving lead-time efficiency is compelling companies to take various steps to meet demand, making contract manufacturing a key enabler in the supply chain for accelerating execution. Contract Development and Manufacturing Organizations (CDMOs) are experiencing notable growth in the market due to their utilization of cutting-edge technology and specialized knowledge.

The biopharmaceutical CDMOs most likely to succeed in a highly competitive industry are willing to adopt cutting-edge technology and invest the required time and capital to develop differentiated capabilities. In response to the surging prevalence of infectious diseases and the increased demand for novel therapies, pharmaceutical and biotechnology companies that require greater capital investments for advanced technologies are forming partnerships with CDMOs, thereby contributing to the expansion of the market.

Need for High Capital Investments to Develop Capabilities Drives the outsourcing model.

The research and development (R&D) process is inherently long, complex, and expensive, starting with research and final drug approval. According to the Tufts Center for the Study of Drug Development, developing a new medicine costs an average of USD 2.6 billion, including the expense of failures. Large and small drug companies are engaging with contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) earlier in the development process to overcome significant difficulties and achieve higher efficiency across the drug development continuum.

Furthermore, according to clinicaltrails.gov, there is an increase in the total number of registered clinical cases worldwide, and this will create new emerging opportunities for outsourcing R&D. Several pharma and biopharma developments also contribute to the growing outsourcing of R&D activities and reducing drug development delays and costs. These factors are expected to expedite market expansion.

Global Biologics Contract Development and Manufacturing Organization (CDMO) Market Restraint

In-House Manufacturing of Biologic Drugs by Leading Pharma Companies

Leading pharmaceutical companies' internal production of biologic pharmaceuticals hinders their expansion due to the high value and high margin associated with these products. Consequently, large corporations are prioritizing the assurance of supply, the preservation of quality, the safeguarding of intellectual property pertaining to exclusive cell strains, and the optimization of manufacturing processes. This particular issue serves as a constraint on the growth of the global market.

Global Biologics Contract Development and Manufacturing Organization (CDMO) Market Opportunities

Lack of In-House Capacity Among Emerging Drug Development Companies

Capacity constraints are still a problem in the pharmaceutical industry, and almost 6 in 10 pharma manufacturers face minor constraints at some manufacturing stage. Biopharma is more complex to produce than conventional pharmaceuticals, resulting in a global shortage of production capacity. As a result, prices continue to be high, and applications are often limited to low-volume and high-need areas. However, compared to biotherapeutic developers, CMOs appear less afflicted by significant constraint issues.

CMOs' capacity utilization rates have skyrocketed due to growing demand, mainly supported by increased production levels and actions taken by CMOs to maintain supply and demand balance. CMOs express fewer concerns about overall capacity constraints than product developers, as clients do not contract them to assume tasks requiring manufacturing capacity beyond delivery capacities. Thus, the inability to cater to highly demanding turnaround times in biopharma companies and the increasing demand for higher capacities create opportunities for the demand for CDMOs in the current market scenario.

Regional Analysis

North America Dominates the Global Market

Based on region, the global biologics contract development and manufacturing organization (CDMO) market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global biologics contract development and manufacturing organization (CDMO) market shareholder and is anticipated to exhibit a CAGR of 10.69% during the forecast period. North America is among the major markets for the biologics CDMO industry because of the presence of two major economies, the United States and Canada. According to Results Healthcare, the region holds approximately 37% of the CDMO market share and is anticipated to grow by mid-single-digit percentage points over the coming years. Moreover, according to PhRMA, spending of the US pharmaceutical industry (PhRMA members) on R&D abroad totaled approximately USD 18.6 billion in 2019. With such a prominent presence in the market, the biologic CDMO market players in the region are expected to scale up their presence and expand their capacities.

Additionally, the United States is the world's largest drug market, accounting for almost half of the R&D revenue In pharmaceutical and biotechnology markets. Hence, biologic CDMOs play a vital role in this market and have invested in new technologies and facilities to cater to various outsourcers. For instance, in June 2020, AGC Biologics announced an investment of about USD 100 million into the AstraZeneca plant in Boulder; such developments are expected to increase over the coming years.

Europe is estimated to exhibit a CAGR of 11.05% over the forecast period. Europe provides tax benefits to large and small-scale companies to promote more outsourcing activities. The surging prevalence of chronic diseases is also expected to boost market growth. For instance, in the United Kingdom, there are about 360,000 new cases of cancer reported each year, i.e., 990 new cancer cases each day. As the need for targeted therapeutics increases year over year, the need for commercial-scale manufacturing of biopharmaceuticals grows stronger. Hence, many big pharmaceutical companies and smaller biotech companies depend on CDMOs' expertise to bring these complex drug products to market. Furthermore, one of the factors attracting pharmaceutical manufacturers to outsource production to this region is highly skilled and specialized employees, which is vital for manufacturing highly Potent APIs (HPAPIs), thereby creating more opportunities for the biologics CDMO.

In Asia-Pacific, pharmaceutical companies are more comfortable and willing to outsource their biologic products' secondary manufacturing and packaging stages, even with the growing tendency to keep biologic API production in-house. Another major factor influencing the growth in outsourcing biologics to CDMOs in the region is the lack of available assets amongst CDMOs. This is expected to change over the next five years due to increasing investment from major CDMOs to expand their capabilities in the sub-sector. In addition, CDMOs in the region are expected to form collaborations and partnerships with pharmaceutical companies to expand and enhance their biologic services. For example, in August 2020, HJB, a biologics CDMO, entered a strategic partnership for CMC development and manufacturing with Ansun Biopharma on its therapeutic biologics pipeline. New biologics CDMOs in the region are setting up a base as investor interest in the sector increases in line with recent regulatory reforms and growing market demand. All these factors influence the region's global biologics contract development and manufacturing organization (CDMO) market.

Latin America poses many opportunities for biologic drugs, especially biosimilars. There is high expertise and development of biosimilars in the region, thereby increasing the demand for various local and foreign pharmaceutical companies to penetrate the market to investigate, produce, and commercialize locally and internationally. Despite the efforts of big multinationals to produce breakthrough biologic drugs, the biologic CDMO market is constantly evolving in the region, keeping itself competitive. Further, the recent changes in local regulations positively affect the market and drive the race against innovative biologics. Due to favorable factors like low manufacturing costs and multiple GMP-certified plants, pharmaceutical firms are interested in entering the Brazilian market, widening the scope of the biologics CDMO industry in the region.

Although the Middle East remains unexplored territory for several biopharmaceutical companies, the scenario is rapidly changing. The Middle East and African biologics CDMO segment has reached an exciting stage where the region can offer opportunities for long-term growth and a promising base for R&D activities for companies. The growing scientific and medical community and the Middle Eastern government's efforts to become self-sufficient in pharmaceutical production are expected to result in a bright outlook for drug makers and biologics contract manufacturers in this region.

Segmental Analysis

The global biologics contract development and manufacturing organization (CDMO) market is segmented by type and product type.

Based on type, the global biologics contract development and manufacturing organization (CDMO) market is segmented into mammalian and non-mammalian (microbial).

The mammalian segment owns the highest market share and is estimated to exhibit a CAGR of 12.17% during the forecast period. Biopharmaceuticals, or biologics, have been a growing sector, with cultured mammalian cells gaining momentum across expression systems for production due to their ability to complete the posttranslational modifications required for drug safety and efficacy. Mammalian biologics has evolved as the preferred production technology due to pipeline increases and improvements in manufacturing technology in both volumetric and specific productivities.

In addition, the growing incidence rate of oncology and immunological disorders is the primary driver of consumption. As biologics production by mammalian cells continues to increase, the overall biopharmaceutical industry is expected to continue developing next-generation-based efficient cell culture processes. Therefore, market leaders have witnessed increasing mammalian-based production capacities on the manufacturing front. For instance, Lonza's mammalian manufacturing offerings are mostly based on biotherapeutics. As a part of its 2021 strategy, the company unveiled a few of its expansion plans in 2021.

Fermentation has been increasingly used as a productive platform for manufacturing during the past few years thanks to the emergence of smaller, more complicated next-generation molecules from non-mammalian sources, including bioconjugates, antibody fragments, and other scaffolds. Multiple times, CHO systems fail to effectively produce complex, next-generation drug substances (single-domain antibodies, antibody fragments, and peptibodies) with the right properties in clinically relevant amounts. Hence, microbial fermentation offers a better option in such cases. Therefore, developing next-generation therapies based on smaller biological drug substances and advancements across genetically engineered microbial strains have contributed to higher yields for biopharmaceutical production via non-mammalian cells. Merck and Bayer is one such company that completely relies on microbial systems. With high costs, long-development timelines, and lower expression levels, the mammalian cell culture is leading interest in manufacturing processes using microbial organisms.

Based on product type, the global biologics contract development and manufacturing organization (CDMO) market is segmented into biologics and biosimilars. 

The biologics segment is the largest revenue contributor to the market and is projected to exhibit a CAGR of 10.74% over the forecast period. The biologics segment is further bifurcated into monoclonal, antisense and molecular therapy, vaccines, recombinant proteins, and other biologics. The monoclonal segment dominated the market. Monoclonal or synthetic versions of antibodies have been representative of the most successful therapeutic drug classes and have attracted huge investment in the biologics industry. Because each type of monoclonal antibody targets a specific antigen in the body, using monoclonal antibodies to treat diseases is known as immunotherapy. Mammalian cells are traditionally used for monoclonal antibody production; however, plant-based expression systems have been gaining share due to significant advantages.

Additionally, the advancements in plant glycoengineering have allowed the production of monoclonal antibodies (mAbs) with more homogenous human-like glycans. iBio's proprietary plant-based technology instead of CHO or other mammalian cell technologies led to the development of monoclonal antibody vectors free of any viral transforming functions or contamination from parental lines.

Biosimilar and interchangeable medications may offer more treatment options and reduce healthcare costs for people needing biological therapy. A biosimilar medication is similar to a generic version of a biological drug; however, some key distinctions exist. Biosimilars can increase patient access to adequate and less expensive medicines while also economizing the healthcare system. In February 2022, Biogen Inc. and Xbrane Biopharma AB announced a commercialization and license agreement to develop, manufacture, and market Xcimzane. This preclinical monoclonal antibody is a potential biosimilar to CIMZIA (certolizumab pegol). As stated in the company's annual report, In 2020, global sales of CIMZIA were EUR 1.8 billion. Following the terms of the agreement, Biogen will acquire exclusive global regulatory, manufacturing, and commercial rights to Xcimzane and become the Marketing Authorization Holder.

Recent Developments

• May 2023: Aurigene Pharmaceutical Services Limited, a CDMO, announced the construction of a state-of-the-art development and manufacturing facility for biologics like therapeutic proteins, antibodies, and viral vectors. Aurigene is investing USD 40 million in a research and development and pilot-scale facility in Hyderabad's Genome Valley Biotechnology Park as a first step.
• June 2023: Samsung Biologics signed a long-term arrangement with Pfizer that expanded and prolonged the two companies' USD 183 million production contract from March. This strategic partnership, expected to cost USD 411 million initially, will concentrate on long-term biosimilar manufacturing, specifically for the Pfizer biosimilars portfolio group.