Healthcare Contract Manufacturing Outsourcing Market

Market Overview

Contract manufacturing organizations (CMOs) provide valuable services to the healthcare, pharmaceutical, and biotech sectors. They provide additional development and manufacturing capability, access to specialized technologies, and cost advantages over in-house manufacturing. The pharmaceutical companies have been outsourcing development and manufacturing to minimize capital costs and gain access to resources and assets that are not available internally. Thus, shifting preference towards outsourcing services to third-party manufacturers drives the market growth.

Segmental Analysis

Rapid Development in Pharmaceutical Industry 

Increasing demand for generic medicines and biologics, capital-intensive nature of the market, and complex manufacturing requirements have compelled the pharmaceutical companies to work with contract manufacturing outsourcing (CMOs) for both clinical and commercial manufacturing. The market’s most prominent driver is the increasing need for state-of-the-art facilities and manufacturing technologies. Rapid development in the pharmaceutical industry has dragooned the players to stockpile their pipelines of new drugs. Following are the examples of recent activities in the pharmaceutical industry in terms of contract manufacturing outsourcing;

Contract manufacturing of medical devices is among the fastest-growing sector in the healthcare industry. The production of medical devices by contract manufacturing with third parties reduces the cost of product development by 30%.

Venture Capital: A Key Market Strategy

Globally, leading pharmaceutical companies are investing in venture capital to manage their financial portfolio by acquiring stakes in startups and small-to-medium-sized CMOs with strong growth potential. Volatile economic conditions in the pharmaceutical manufacturing market have compelled leading pharma companies to explore new methodologies to reduce drug manufacturing cost. CMOs aid in minimizing the manufacturing cost of drug products, further increasing the company profits.

Limited blockbuster drugs and rising competition for new drug development is compelling market players to perform extensive research with cost control. After the complex drug regulatory approval process, the firms have limited time to launch large amounts of newly developed drugs in the market. Thus, venture capital plays a critical role in optimizing the companies R&D pipeline and new drug development.

Advent of Latest Technology: A Key Market Driver

The prime factor driving the market growth is changing the product pipeline. With rising demand for biological, the generic and biosimilar pharmaceutical companies are heavily investing in outsourcing to expand their biologics and generics pipeline to eradicate chronic disorders. Such big pharmaceutical firms are constantly searching for adequate and excessive production capacity. Leading market players are adopting aggressive strategies to gain a competitive edge. Stringent regulations guarding the healthcare sector to reduce the probability of fatal incidences hampers the market growth. Healthcare CMO companies are equipped with the latest technology and regulatory trends to provide innovative product solutions, further driving the market growth in the healthcare sector.

Healthcare Contract Manufacturing Outsourcing Market: Segmentation

The global healthcare contract manufacturing outsourcing market can be segmented on the basis of types of services. Based on the types of services the market is divided into Pharmaceutical Contract Manufacturing Services and medical device Contract Manufacturing services.

Pharmaceutical Contract Manufacturing Services Segment Leads the Market

The pharmaceutical contract manufacturing services segment leads the healthcare contract manufacturing outsourcing market. The segment offers several services, which include drug development, stability studies, pre-clinical and clinical trials, and commercial production of bulk drugs and formulations. In the pharmaceutical CMO services segment, the API manufacturing services segment dominates the market. In contrast, the formulation manufacturing segment is expected to grow at the highest CAGR during the forecast period. By the medical device, CMO services segment, the device manufacturing segment held the largest market share and is expected to witness the highest growth during the forecast period. Increasing the outsourcing of devices and rising demand for medical devices drive the segment growth.

Regional Analysis

China, India, and Japan are at the Forefront of Asia-Pacific’s Healthcare Contract Manufacturing Outsourcing Market

Asia-Pacific dominates the healthcare contract manufacturing outsourcing market. Improving healthcare services and the economic growth of developing countries such as India, China, and Japan drive market growth. The low cost of contract manufacturing is compelling regional players to shift towards contract manufacturing, further driving the market growth.

China is at the forefront of the healthcare contract manufacturing outsourcing services market. Today, CMOs in China offer API and bulk drug products for approved generic drugs and biosimilars. Chongqing Huapont Pharmaceutical, Shandong Xinhua Pharmaceutical, Porton Fine Chemicals, Venturepharm Laboratories, Beijing Second Pharmaceutical, Tianjin Pharmaceutical, and Asymchem Laboratories are the country’s top APIs and pharmaceutical CMOs.

The emergence of multinational pharmaceutical companies drives India’s healthcare contract manufacturing market. Today, contract manufacturing services offer formulations development, manufacturing of pharmaceutical drugs, stability testing, and various stages of pilot and scale-up studies in manufacturing. India is taking advantage of its domestic CMO market, enabling the Japanese pharmaceutical industries to develop their drug products in Indian-based CMOs.

The demand for CMOs in Japan is stagnant. To address the situation, the government of Japan formulated the Pharmaceutical Affairs Act 2018 to distinguish manufacturing and sales, which drove the Japanese CMO market by 30 %.  Bushu Pharmaceuticals, Nipro Pharma, and CMIC are some of the CMO manufacturers in Japan.

The U.S. Holds Over a Quarter Value Share of the Global Market

North America will show substantial growth in the medical device contract manufacturing outsourcing service market. The region is backed by the presence of the U.S. that comprises seven largest medical device manufacturers and accounts for about 45% of the global market share. The key players are channelizing efforts to expand their manufacturing facilities in North America due to the availability of a large number of CMOs in the region. Rising medical device development costs and raging market competition are compelling the market players to outsource their manufacturing process, further driving the market growth.

Recent Developments

In February 2020, Catalent Pharma Solutions, Inc. signed a contract with Zumutor Biologics, Inc to manufacture API ZM008 indicated for the treatment of solid tumors. Zumutor is famous for the development of biologics, such as novel Immunooncotherapeutics for cancer treatment.

In December 2019, Thermo Fisher Scientific Inc. established a new contract device manufacturing site in Lexington and invested about USD 90 million. The facility will aid in expanding the company’s product portfolio.

Healthcare Contract Manufacturing Outsourcing Market Segmentation

By Types of Services

• Pharmaceutical Contract Manufacturing Services
  • Active pharmaceutical ingredients (API) manufacturing
  • Formulations manufacturing
  • Packaging services
• Medical Device Contract Manufacturing Services
  • Accessories manufacturing
  • Assembly manufacturing
  • Design outsourcing
  • Device manufacturing