Outlook for the contract manufacturing industry following the growing biologics pipeline

The recent years have portrayed the renaissance in the domain of biologics, as pharmaceutical industry has once again gained attention towards the production of bioproducts. In fact, in 2019, a total of 28 biopharmaceutical products (including monoclonal antibodies, recombinant proteins and gene therapies) were approved in the US. Further, over 8,000 biological pharmaceutical products are currently under clinical investigation, across the world. The modification and innovation in the contract manufacturing industry operations for the production of various biologics have side-lined some of the earlier concerns associated with them, such as rate of attrition of pipeline drugs / therapies, prolonged development timelines, complex molecular structure (which demand niche and specialized expertise), current facility limitations and capacity constraints, and safety and efficacy-related issues, and has led to manufacturing of high-quality biologics in a larger quantity. Although, the larger players have the necessary resources to develop in-house capabilities to cater to the complex requirements related to the manufacturing of biologics, the mid-sized and smaller players generally opt for outsourcing of such operations.

Service Providers Offering Biopharmaceutical Contract Manufacturing

Over 220 industry players are actively involved in the biopharmaceutical contract manufacturing. The biopharmaceutical contract manufacturing industry is presently highly fragmented, featuring the presence of small companies (30%), mid-sized players (47%), large firms (15%) and very large firms (8%). Some of well-established players engaged in this domain include (in alphabetical order) AbbVie Contract Manufacturing, Almac, FUJIFILM Diosynth Biotechnologies, GlaxoSmithKline (GSK), Lonza, Sandoz and Sanofi CEPiA.

Recent Developments in the Biopharmaceutical Contract Manufacturing

Since 2015, partnership activity within the biopharmaceutical contract manufacturing domain has increased with an annualized growth rate of 7.9%. Manufacturing agreements have captured a substantial share in the partnerships related to biopharmaceutical contract manufacturing, during the period of 2015-2020.This was followed by product development and manufacturing agreements, which have captured a significant share of the partnerships inked in this domain. Further the domain has witnessed some consolidation during the period of 2016-202. We were able to identify the key value drivers, such as geographical consolidation, geographical expansion, capability expansion, capacity expansion and access to new technology behind the various acquisitions reported during the given time period. Majority (44%) of the acquisitions in the biopharmaceutical contract manufacturing industry were focused on capability expansions, followed by geographical consolidation and geographical expansion (24%), each. Further, most of the expansions (44%) initiated within this domain were for the establishment of a new facility, followed by initiatives carried out for expansion of existing facilities (24%).

Capacity with the Companies – Enough to Meet the Demand?

The current manufacturing capacity installed by CMOs is evenly distributed across different scale of operations. In addition, around 92% of the capacity belongs to large and very large manufacturers. Further, CMOs based in North America (29%), Europe (36%), and Asia-Pacific (35%) have comparable biomanufacturing capacity. This can be attributed to the inherent technical, regulatory and financial superiority of the aforementioned regions.

Likely Growth of the Biopharmaceutical Contract Manufacturing Market

The biopharmaceutical contract biomanufacturing market is anticipated to grow at an annualized rate of approximately 11%, as the drug developers are anticipated to continue to outsource their manufacturing services in mid to long term. At present, close to 90% of the total revenues are generated from commercialized biologics. Further, it is worth mentioning that the contract biomanufacturing market for biologics in North America and Europe are anticipated to capture 75% share of the market, by 2030.

With outsourcing being increasingly accepted as a viable and beneficial business model within the biopharmaceutical industry, we anticipate the biologics manufacturing services market to grow at a steady pace in the coming years.

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