Pharmaceutical Contract Manufacturing Market Size 2024-2028

The pharmaceutical contract manufacturing market size is estimated to increase by USD 64.8 billion and grow at a CAGR of 8.1% between 2023 and 2028. The growth of the pharmaceutical market is driven by several key factors, including patent expiration and rising demand for generic drugs, alongside the increasing emphasis on core competencies and robust research funding. However, the market faces challenges such as capacity utilization constraints, the conventional nature of Contract Manufacturing Organizations (CMOs), and stringent regulatory frameworks governing their operations. These elements collectively shape the trajectory of the market, influencing its growth and presenting obstacles that necessitate strategic navigation to ensure sustained development and innovation in pharmaceutical contract packaging. Addressing capacity limitations, transforming the operational landscape of CMOs, and navigating regulatory complexities are imperative for overcoming hurdles and fostering a conducive environment for the pharmaceutical industry's evolution. By leveraging core competencies and research investments, stakeholders can capitalize on emerging opportunities and drive advancements in drug manufacturing while ensuring compliance with evolving regulatory standards.

What will be the Size of the Pharmaceutical Contract Manufacturing Market During the Forecast Period?

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Pharmaceutical Contract Manufacturing Market Segmentation

The pharmaceutical contract manufacturing market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.

• End-User Outlook
  • Big pharmaceutical companies
  • Small and medium-sized pharmaceutical companies
  • Generic pharmaceutical companies

• Service Outlook
  • API/bulk drug manufacturing
  • Final dosage form
  • Secondary packaging

• Region Outlook
  • North America
    • The U.S.
    • Canada
  • Europe
    • U.K.
    • Germany
    • France
    • Rest of Europe
  • Asia
    • China
    • India
  • ROW
    • Australia
    • Argentina
    • Rest of the world

By End-user

The market share growth by the big pharmaceutical companies segment will be significant during the forecast period. Big pharmaceutical companies is a term for the world's largest publicly traded pharmaceutical companies. The largest pharmaceutical companies may also have divisions that produce medical equipment. These companies are usually larger than companies that focus on medical devices alone. 

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The big pharmaceutical companies segment was valued at USD 56.20 billion in 2018.  In this segment, pharmaceutical clients can extend their technical resources by outsourcing to a CMO without incurring more overhead. CMOs have become more significant in the pharmaceutical sector during the past 25 years. Moreover, the big pharmaceutical companies have also been prioritizing their efforts in their core competencies. Hence, they prefer not to use the existing tools, knowledge, and technology when creating the final dose of medications. Instead of producing the formulated drug to remain competitive in the market, pharmaceutical companies had to review their production techniques and R&D operations. This was due to growing competition and narrowing profit margins. Thus, such partnerships between big pharmaceutical companies and CMOs is expected to drive the growth of the global pharmaceutical contract manufacturing market through the big pharmaceutical companies segment during the forecast period.

By Region

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Asia is estimated to contribute 45% to the growth of the global pharmaceutical contract manufacturing market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Another region offering significant growth opportunities to companies is North America. The pharmaceutical contract manufacturing market in North America is experiencing significant growth, driven by increasing demand for cost-effective and efficient drug manufacturing solutions. In recent years, there has been rapid growth in the number of new and innovative drugs entering the market. These drugs are often highly specialized and require specialized manufacturing processes that are not available in-house for pharmaceutical firms. This has led to an increasing dependence on CMOs that have the required expertise and facilities to manufacture these specialized drugs. These factors will fuel pharmaceutical contract manufacturing market growth during the forecast period.

Pharmaceutical Contract Manufacturing Market Dynamics

The market is witnessing robust growth, driven by various critical factors. Small pharmaceutical companies rely on contract manufacturers for the production of finished dosage formulations (FDFs), including specialized products like antibody-drug conjugates (ADC). Outsourced manufacturing of generic drugs and biopharmaceuticals streamlines production processes and ensures efficient pharmaceutical supply chains. Contract manufacturers play a pivotal role in developing biosimilars and facilitating drug formulation and development. Bioprocess outsourcing hubs support the production of vaccines and antibiotics pipelines, while serialization technologies combat counterfeiting. Personnel training is essential for biologic manufacturing, catering to the needs of commercial and mid-sized pharmaceutical companies. Large pharmaceutical companies leverage contract manufacturing organizations (CMOs) for advanced therapies like cell and gene therapies, personalized medicines, and anti-cancer therapies, driving innovation in the oncology drugs market.

Key Market Driver

Patent expiry and increasing demand for generic drugs is the key factor driving the growth of the global pharmaceutical contract manufacturing market. Generic drugs are cheaper medicines with the same therapeutic safety and efficacy as the branded version. One of the main reasons for the expansion of the generic drug industry is the increasing pressure to reduce rising healthcare costs. With such cost savings in mind, governments around the world are encouraging the use of generic drugs. The expiration of various pharmaceutical patents is another important reason behind the expansion of the generic drug industry. In emerging nations such as South Korea, around 51 patents covering more than 150 pharmaceutical products are scheduled for termination in 2023.

However, although the patent cliff has resulted in significant income and volume losses for the branded drug industry, patent expiration allows multiple cheaper generic equivalents to enter the market (which will boost the volume of drugs sold). This is a positive indication for industry expansion because generics companies outsource around 80% of their production to CDMOs. These factors are expected to drive pharmaceutical contract manufacturing market growth during the forecast period.

Significant Market Trends

One of the recent trends in the global market is the increase in US FDA-approved manufacturing facilities in emerging markets. China and India are two key countries in the global contract manufacturing market. China's contract pharmaceutical manufacturing market has been limited to contract research organizations (CROs) due to strict government regulations on CMOs. However, the market has witnessed a significant change since the country's State Council allowed drug Marketing Authorization Holders (MAH) to use third-party licensed manufacturers or CMOs in most regions of the country.

As a result, the market has witnessed an increase in the number of US FDA-approved facilities in the country. Various foreign pharmaceutical companies are outsourcing the manufacture of drugs to CMOs in the country, which is increasing the adoption of CMOs. Thus, an increasing number of US FDA-approved manufacturing facilities will drive pharmaceutical contract manufacturing market growth during the forecast period.

Major Market Challenge

Capacity utilization and constraints are major challenges to the growth of the global market. Utilization is a measure of actual production versus potential production at the company's maximum production capacity. Due to the complexity of the manufacturing process, it plays an important role in the production of various therapeutic agents, especially biological medicines. Approximately 35% of CMOs face minor constraints such as time, cost, and resources at least at some stage of the manufacturing process, and an estimated 20% of CMOs face moderate to severe constraints during the manufacturing process. Such constraints associated with manufacturing are preventing CMOs from producing therapeutics at their full potential, which is causing delays in the launch of several therapeutics.

Additionally, the high cost of downstream cleaning further impedes CMOs from operating at optimal capacity. Factors such as the limited number of approved production sites also lead to capacity bottlenecks. Lack of new and experienced scientists, technical personnel, and production personnel. The limitations of advanced cell culture systems on upstream performance are also causing limitations in the market. Therefore, the above factors are expected to hinder pharmaceutical contract manufacturing market growth during the forecast period.

Customer Landscape

The pharmaceutical contract manufacturing market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the pharmaceutical contract manufacturing market growth analysis report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Pharmaceutical Contract Manufacturing Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Almac Group Ltd.: The company offers pharmaceutical contract manufacturing services such as diagnostic services, API services, and pharmaceutical development.

The pharmaceutical contract manufacturing market research and growth report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• AbbVie Inc.
• Baxter International Inc.
• Boehringer Ingelheim International GmbH
• Cadila Pharmaceuticals Ltd.
• Charles River Laboratories International Inc.
• Cmic Holdings Co. Ltd.
• Dalton Pharma Services
• Dr Reddys Laboratories Ltd.
• Grifols SA
• Laboratory Corp. of America Holdings
• Lonza Group Ltd.
• Lupin Ltd.
• Novotech Health Holdings
• OPTIMAPHARM d.o.o.
• Parexel International Corp.

Qualitative and quantitative analysis of Companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize Companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize Companies as dominant, leading, strong, tentative, and weak.

Market Analyst Overview

The pharmaceutical contract manufacturing market is experiencing significant growth fueled by various factors. Outsourced manufacturing, especially for biopharmaceuticals and biosimilars, plays a pivotal role in pharmaceutical supply chains, enabling drug manufacturers to focus on core competencies like drug formulation and development. Contract manufacturers ensure quality control and assurance, particularly for high-potency drugs and specialized delivery systems, while adopting digitalization for efficient operations. With a focus on continuous manufacturing and bioprocess outsourcing hubs, the market caters to diverse needs, from vaccines to personalized medicines and oncology drugs. Small and mid-sized pharmaceutical companies leverage contract manufacturing organizations (CMOs) for drug development services and finished dosage formulations, collaborating with academic institutes and biopharmaceutical manufacturing experts to drive innovation and address chronic diseases effectively with active pharmaceutical ingredient (API).

The market is thriving, driven by several crucial factors. Quality assurance remains paramount in pharmaceutical manufacturing services, ensuring the efficacy and safety of new drug delivery systems across the drug development process. From drug substance production to the development of antibiotics pipelines, serialization technologies combat counterfeiting, supported by pharma serialization solutions. Personnel training is key in biologic manufacturing and the production of small molecule products, alongside academic institutes specializing in cell and gene therapies. With a focus on biologics and finished dosage formulations, both small and large pharmaceutical companies benefit from pharma contract manufacturing, particularly in producing antibody-drug conjugates and anti-cancer therapies for the expanding oncology drugs market. Robust manufacturing processes enable bulk, parenteral, and injectable manufacturing to meet the demand for commercial pharmaceutical products efficiently.

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What are the Key Data Covered in this Pharmaceutical Contract Manufacturing Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market's competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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