Pharmaceutical Contract Manufacturing Research Market

Market Overview

The global pharmaceutical contract manufacturing research market size was valued at USD 195.03 billion in 2022. It is estimated to reach USD 315.77 billion by 2031, growing at a CAGR of 5.5% during the forecast period (2023–2031). 

The evolution of biological drugs has aided the emergence of biologics in tackling the pitfalls associated with synthetic drugs/biosimilars, which drives demand for the growth of contract manufacturing services within pharmaceutical industries. Pharmaceutical contract manufacturing research encompasses various studies and investigations to enhance our understanding of the field. One key area of research involves conducting market analysis to gain insights into the global pharmaceutical contract manufacturing market. This analysis involves studying the market size, growth projections, and key players operating in the industry. Researchers examine market dynamics, regional trends, market segmentation, and the competitive landscape to identify opportunities and challenges within the market.

Another important aspect of pharmaceutical contract manufacturing research is the exploration of manufacturing processes and technologies. Researchers delve into different manufacturing processes contract manufacturers employ and evaluate their efficiency, scalability, and quality control measures. They also investigate emerging technologies and innovations in formulation development, process optimization, and regulatory compliance to identify best practices and advancements to enhance manufacturing.By conducting rigorous research, stakeholders in the pharmaceutical industry can make informed decisions, drive innovation, and optimize their operations within the contract manufacturing ecosystem.

Market Dynamics

Global Pharmaceutical Contract Manufacturing Research Market Drivers

Commercial Success of Biologics for Clinical Use

The evolution of biological drugs has aided in overcoming the concern about the use of traditional synthetic drugs. These synthetic drugs are derived from synthetic chemicals that are otherwise not present in the human body and, in turn, cause adverse effects. Hence, biopharmaceutical companies are adopting a biological process to develop biologics targeting over 100 diseases. These biopharmaceuticals include monoclonal antibodies, vaccines, and gene and cell therapies.

The emergence of biologics enables tackling the pitfalls associated with synthetic drugs/biosimilars, which drives demand for the growth of contract manufacturing services within pharmaceutical industries. This rising demand for outsourcing services for biologics development is attributed to biologics' manufacturing complexity. Along with biologics' complexity, biopharmaceutical development manufacturing processes are sensitive and complicated. Slight changes in any of the factors, such as temperature, are likely to impact the safety and efficacy of the final product. These factors are forecasted to contribute to the growth of contract manufacturing services for biologics production.

Lower Manufacturing Cost and Improving Economic Condition of BRIC

BRIC countries represent significant opportunities for the growth of contract manufacturers. Skilled human resources and great manufacturing potential in China offer avenues to contract manufacturers, enabling them to enhance their market share. The biosimilar industry of the country is estimated to be a lucrative market owing to its large population and low insurance coverage rates. Furthermore, there is a significant growth in its GDP with a substantial increase in healthcare and public infrastructure. In addition, the Chinese government has stressed the establishment of facilities for the production of low-cost medicines.

Russia is engaged in investing heavily in the development of its healthcare systems. Brazil has been an important country for mergers and acquisitions of national companies. Lower operations and production costs have prompted global drug developers to consider India for their outsourcing needs. Moreover, the Indian government is undertaking various initiatives to encourage investments in the Indian pharmaceutical industry and to boost the number of skilled personnel in the country. Emerging nations like Brazil, India, and China are anticipated to drive nearly half of the growth in the global pharmaceutical industry in the foreseeable future. This, in turn, makes them attractive markets for the growth of CMOs and CROs.

Global Pharmaceutical Contract Manufacturing Research Market Restraints

Limited Outsourcing Opted by Big Pharma Companies

The presence of big pharma companies capable of performing in-house drug manufacturing is recognized as the primary factor impeding the expansion of this market. These companies conduct in-house research, develop their candidate drugs, and perform clinical testing. Several companies like Novartis have announced initiatives to expand their in-house manufacturing capabilities and not rely on contract services to meet the global pharmaceutical demand. This is primarily to maintain the secrecy of their product development and completely control the drug development process. However, growing drug demands, an increasingly aging population, and the development of new pharmaceutical products pressurize the public health budgets and lead to an increase in private health spending, which is expected to accelerate the growth of the pharmaceutical contract manufacturing services market.

Global Pharmaceutical Contract Manufacturing Research Market Opportunities

Budget Constraints Faced by Small and Emerging Players

One of the key market opportunities in global pharmaceutical contract manufacturing research is the budget constraints faced by small and emerging players in the pharmaceutical industry. Small and emerging pharmaceutical companies often face financial limitations, making investing in expensive manufacturing infrastructure and capabilities challenging. These companies can leverage contract manufacturing services to fulfill their needs without significant upfront investments. Contract manufacturing allows small and emerging pharmaceutical companies to access specialized manufacturing facilities, state-of-the-art equipment, and experienced personnel without substantial capital expenditure. By outsourcing their manufacturing requirements to contract manufacturers, these companies can focus their limited financial resources on other critical areas such as research and development, regulatory compliance, and marketing.

Additionally, contract manufacturing offers cost efficiencies for small and emerging players. Contract manufacturers have economies of scale and expertise in optimizing production costs, allowing them to offer competitive pricing compared to setting up and maintaining in-house manufacturing capabilities. This cost advantage enables small and emerging pharmaceutical companies to bring their products to market at a more affordable price, increasing their competitiveness and market reach.

Regional Analysis

North America Dominates the Global Market

Based on region, the global pharmaceutical contract manufacturing research market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global pharmaceutical contract manufacturing research market shareholder and is estimated to grow at a CAGR of 3.12% over the forecast period. One of the main elements fuelling this expansion is the presence of many players in the region that specialize in providing contract services and solutions for biologics and drug development. These businesses provide numerous services, including formulation development, manufacturing, packaging, and quality control, catering to the diverse needs of pharmaceutical companies. The increasing demand for pharmaceutical products in North America is a key driver for outsourcing drug development processes to contract manufacturers. As the pharmaceutical industry continues to evolve and expand, there is a growing need for efficient and cost-effective manufacturing solutions. Contract manufacturers offer the expertise, infrastructure, and resources required to meet the increasing pharmaceutical demand.

Additionally, the North American pharmaceutical contract manufacturing and research market is experiencing steady growth due to a robust ecosystem of contract manufacturers, increasing demand for pharmaceuticals, technological advancements, and regulatory bodies ensuring drug safety and efficacy. This market allows pharmaceutical companies to leverage specialized manufacturing capabilities, reduce costs, and focus on core competencies, thereby driving innovation and efficiently bringing new drugs to the market.

Europe is anticipated to exhibit a CAGR of 2.50% over the forecast period. The European pharmaceutical contract manufacturing and research market is forecasted to grow significantly over the anticipated period. Some factors responsible for this growth are increased investments in pharmaceutical R&D, effective intellectual property regimes, demographic changes, and increased risk of epidemics. In addition, as per the European Commission, the European industry accounts for half of the pharmaceutical imports of the fast-growing markets in the world. The R&D expenditure in the pharmaceutical sector has grown significantly in the region. The cost of drug development is continuously increasing. This rise in R&D cost can be attributed to increasing R&D on complex diseases.

Furthermore, significant competition among companies to develop innovative medicines is forecasted to create growth opportunities in the European contract pharmaceutical manufacturing services market. This has also motivated several drug manufacturers to increase their investment in R&D. Furthermore, the free and fair-trade regime in this region plays a pivotal role in maintaining the long-term viability of the European pharmaceutical industry, resulting in market growth in the region.

The Asia-Pacific region is a dominant force in the pharmaceutical contract manufacturing and research market, driven by factors such as improved social insurance schemes, favorable economic conditions, expanding manufacturing capabilities, and the availability of a large patient population. The region offers cost advantages and has become a preferred outsourcing destination for pharmaceutical manufacturing. A diverse patient pool also supports the conduct of clinical studies and trials, further contributing to the growth of the pharmaceutical industry in the Asia-Pacific.

Latin American countries hold great growth prospects for pharmaceutical contract manufacturing in the foreseeable future. Expansion of international and well-established companies, such as Pharmaceutical Product Development Inc (PPD) and QuintilesIMS, in countries like Brazil, Mexico, Argentina, and Chile is one of the key drivers propelling growth in the Latin American market. Moreover, major pharmaceutical companies opt for outsourcing services as a viable strategy to stay competitive in the market. Although Brazil dominates this region in market size and population, countries such as Mexico and Argentina are expected to provide ample opportunities for API outsourcing and finished-dose products.

The Middle East and Africa pharmaceutical contract manufacturing and research market is still developing; the region has growing awareness and interest in biopharmaceuticals. The focus on developing local manufacturing capabilities, increasing healthcare expenditure, and improving healthcare infrastructure are expected to drive the market's growth. Contract manufacturers and research organizations have an opportunity to contribute to the expansion of the pharmaceutical industry in MEA by providing specialized services and solutions to meet the region's evolving healthcare needs.

Segmental Analysis

The global pharmaceutical contract manufacturing research market is bifurcated into services.

Based on services, the global pharmaceutical contract manufacturing research market is manufacturing and research. 

The manufacturing segment dominates the global market and is projected to exhibit a CAGR of 5.2% over the forecast period. Contract manufacturing services dominated the market concerning revenue in 2022 and are expected to grow significantly over the forecast period. The lucrative growth rate can be attributed to an increase in companies opting to outsource manufacturing drug substances (APIs) and finished drug products/ clinical-trial materials.

Furthermore, the World Bank has predicted global economic growth to be 3.1% in 2018. This is anticipated to increase pharmaceutical spending, thus increasing the budget for outsourcing drug development. Contract manufacturers are considered the short-term solution for production capacity constraints as they offer a wide range of services for pharmaceutical industries. Manufacturing outsourcing covers safety assessment services, dosage and formulation development, regulatory assistance, analytical assay development, and release and stability testing.

Recent Developments

• February 2023- Catalent announced opening a new clinical manufacturing facility in the United States. The facility will be used to manufacture clinical trial materials for pharmaceutical companies.

• January 2023- Lonza announced the expansion of its API manufacturing facility in Switzerland. The expansion will increase the facility's capacity by 50%.

• December 2022- Jubilant Life Sciences announced the acquisition of a contract development and manufacturing organization (CDMO) in India. The acquisition will expand Jubilant's CDMO capabilities.