Healthcare Contract Development and Manufacturing Organization Market

Market Overview

The global healthcare contract development and manufacturing organization market size was valued at USD 221.97 billion in 2021. It is projected to reach USD 476.55 billion by 2030, growing at a CAGR of 8.86% during the forecast period (2022–2030).

A contract development and manufacturing organization is an enterprise or organization that provides classified services to other organizations on a contract basis, including medication discovery and drug manufacturing for various therapeutic applications. This contract permits most pharmaceutical companies to outsource those aspects of their operations that support scalability, allowing them to concentrate on drug discovery and marketing. Pre-formulation services include formulation development, pre-formulation, clinical trials, formal stability, stability studies, registration, and commercial production batches. The objective of service providers is to concentrate on a single technology or dosage form while ensuring end-to-end consistency and efficiency for all outsourcing clients. It is anticipated that the presence of end-to-end service providers that offer value-added services for an integrated or risk-sharing business model will stimulate market growth.

Market Dynamics

Global Market Drivers

Increasing Outsourcing Services by Pharmaceutical Companies

Rapid technological advancements (such as automation and artificial intelligence), the need for CROs, CMOs, and CDMOs, and rising research investments are all impacting the healthcare market as it is undergoing a process of dynamic change. Many pharmaceutical companies find that outsourcing activities help them increase operational effectiveness, broaden their geographic reach, cut resource costs, acquire therapeutic expertise, and enhance on-demand services. Small and midsize biopharmaceutical companies account for about 75% of the pipelines for new drugs. Due to their high-profit margins, these businesses are easy targets for healthcare providers looking to cut costs. Therefore, it is profitable for these businesses to outsource services to third-party organizations with the necessary expertise and equipment rather than invest in building their infrastructure. Many pharmaceutical companies are looking for opportunities in the advanced supply chain to optimize the development of their molecule.

Increasing Demand for One-Stop-Shop CDMOs

Innovation and speed in the clinic are essential to many pharmaceutical companies. In the one-stop-shop service model, a CRO handles everything from the active pharmaceutical ingredient (API) to the dosage form and from early development to commercialization. To offer these services, a CDMO needs to have a wide range of enabling technologies and the ability to handle specific problem statements. Outsourcing Pharma states that sponsors do not just drive the one-stop-shop service. Instead, it is a way for CMOs to compete in the fragmented healthcare contract pharma manufacturing space by offering M&A at lower costs. Many CROs are becoming one-stop shops (full-service providers) offering a long list of R&D services, both core, and auxiliary R&D services. As pharmaceutical and biopharmaceutical companies try to become more competitive, working with a CRO that offers benefits from start to finish can be smart. As a result, there is a growing demand for one-stop-shop services from CROs and pharmaceutical companies.

Global Market Restraint

Compliance Issues while Outsourcing

Outsourcing is much faster than licensing since negotiating a license takes longer. However, a CRO may be working on multiple projects for different clients simultaneously, which can cause delays and limits on production capacity. Also, when a company outsources, it loses control over its operations, making communication and decision-making less effective. Compliance issues that need to be assessed include data privacy, import/export laws, immigration issues, property rights, local law concerns, enforcement, and the ability to move or let someone go. A client must share the same primary IP address. The central part is the core IP, which can lead to problems with infringement. When drafting contracts, clients must keep transparency in mind. With technologies facilitated by digitization and artificial intelligence, it is possible to overcome these obstacles.

Key Market Opportunities

Rising Incidence of Cardiovascular Diseases

Heart and blood vessel diseases are the primary cause of death worldwide. Cardiovascular diseases will likely worsen as the elderly population grows. It is essential to detect cardiovascular disease as soon as possible to begin treatment with counseling and medication. Health policies that make it easy and affordable for people to make healthy choices are essential for getting people to start and keep healthy habits.

In addition, hypertension, diabetes, and high blood lipids must be treated with drugs in order to reduce cardiovascular risk and control heart attacks and strokes in people with these conditions. The increase in outsourcing of cardiovascular devices is attributable to the rising demand for these devices due to the increasing incidence of associated diseases. Also, cardiovascular devices are more likely to be outsourced because they are hard to make and need a lot of technical knowledge.

Segmental Analysis

The global healthcare contract development and manufacturing organization market is segmented by services.

Based on Services, the global healthcare contract development and manufacturing organization market is bifurcated into contract development and contract manufacturing.

The contract manufacturing segment is the highest contributor to the market and is expected to grow at a CAGR of 8.79% during the forecast period. The healthcare contract manufacturing market is driven by the growing trend of outsourcing, the increasing use of medical devices because of the rise in chronic diseases, and the complexity of making medical devices. API drugs finished dose formulations, and medical devices are three more types of contract manufacturing. In the contract manufacturing segment, the market share for medical devices is expected to be the largest. There are also Class I, Class II, and Class III devices in the medical devices segment. The healthcare contract development and manufacturing organization market is anticipated to be driven by the growing trend of outsourcing, the growing use of clinical devices because of the rise in chronic diseases, and the difficulty of putting together devices.

Global pharmaceutical and biotech organizations are increasingly outsourcing drug development activities to CROs and academics to remain competitive and flexible in a world of increasingly sophisticated technologies, exponentially growing knowledge, and an unstable economic environment. Contract development has several advantages over in-house drug development, including access to industry experts, shorter time to market, cost-effectiveness, and a greater focus on core competencies. Due to a lack of internal capabilities, most small-sized pharmaceutical and biopharmaceutical companies prefer to outsource their drug development activities.

Regional Analysis

The global healthcare contract development & manufacturing organization market is bifurcated into five regions, namely North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant shareholder in the global healthcare contract development and manufacturing organization market and is expected to grow at a CAGR of 8.72% during the forecast period. Considerable well-established biotechnology, pharmaceutical, and medical device companies are located in North America. In addition, rising R&D expenditures by life sciences and pharmaceutical companies are expected to increase demand for contract manufacturing in the region. Strict manufacturing and product quality regulations are expected to create growth opportunities for domestic contract manufacturing services. North America's market growth is anticipated to be influenced by several factors, including a rapid increase in medical device production to meet the region's high demand for effective healthcare. The expansion of pharmaceutical companies' outsourcing practices and CDMOs' assistance in reducing operational and capital expenditures are among the primary reasons for its profitable growth.

Asia-Pacific is expected to grow at a CAGR of 9.57%, generating USD 125.0814 billion during the forecast period. The Asia-Pacific market is anticipated to be driven by factors such as an improved regulatory framework, a high potential for cost savings, increased product complexity, and a growing number of medical device companies in the region. In addition, the availability of skilled labor in the region at a lower price than in the U.S. is anticipated to drive the market. China holds the largest share of the Asia-Pacific market, primarily due to its high healthcare expenditures and rapid introduction of innovative medical devices. Increasing regulatory emphasis on quality control for manufacturing is expected to be a key market driver over the forecast period. Regulatory agencies in the Asia-Pacific include the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan, the Therapeutic Goods Administration (TGA) in Australia, and the Singapore Health Sciences Authority (HSA).

Europe is one of the leading regions in terms of advanced technologies and well-established infrastructure, which has led to improved healthcare facilities and patient care. Entrants to the European market must have a comprehensive understanding of the various regulatory procedures and services in the different EU member states. Without a regulatory affairs department, small and medium-sized medical device companies typically hire a regulatory consultant or a legal representative to guide them through the regulatory approval processes required to commercialize their products in Europe. The market is expected to be driven over the forecast period by well-established market players and their superior manufacturing capabilities. In addition, expanding investments by multinational corporations are anticipated to stimulate the market.

Latin America's proximity to North America can reduce supply chain concerns, boosting the region's market. Due to the cost-effective solutions provided by its CDMOs and an increase in the number of new regional players entering the pharmaceutical and medical device markets, the region is anticipated to exhibit a lucrative growth rate. The number of multinational pharmaceutical and medical device companies in Brazil is expected to increase due to government initiatives aimed at increasing investments in the pharmaceutical and biotechnology industries by substituting imports with domestic products and encouraging partnerships between foreign and local firms. It can assist businesses in expanding operations, launching new products, and engaging in mergers and acquisitions. Such initiatives are anticipated to stimulate the market.

The advantages of outsourcing development and manufacturing operations to MEA include cost-effectiveness, improved infrastructure, and high-quality healthcare facilities. Government incentive programs to increase domestic production, rising healthcare demands, and a brand-friendly environment have expanded the region's pharmaceutical and medical device industries. In addition, growing regional biopharmaceutical awareness is anticipated to impact the market over the forecast period positively. Government initiatives, such as establishing special economic zones, Tripartite Free Trade Areas, tax breaks, and the South African Health Products Regulatory Authority (SAHPRA), are anticipated to increase foreign investments and collaborations, thereby boosting the market.

Recent Developments

• February 2022- Recipharm acquired Arranta Bio, a CDMO leader in advanced therapy medicinal products (ATMPs), to expand its biologics offering in the US.
• May 2022- Jabil Healthcare, a Jabil Inc. division, announced the QfinityTM auto-injector platform launch, a simple, reusable, and modular solution for subcutaneous (SC) drug self-administration at a lower cost than market alternatives, supporting the pharmaceutical industry's growing emphasis on sustainable drug delivery.
• August 2022- Catalent to acquire Metrics Contract Services for USD 475 Million to expand high-potent capabilities and oral development and manufacturing capacity.

Healthcare Contract Development and Manufacturing Organization Market Segmentation

By Service

• Contract Development
• Contract Manufacturing

By Regions

• North America
• Europe
• Asia-Pacific
• Latin America
• The Middle East and Africa