The Contract Development and Manufacturing Organization (CDMO) segment of the pharmaceutical industry has been rapidly expanding in recent years, attracting new players through acquisitions and partnerships. This trend offers promising opportunities for both pureplay CDMOs and traditional drugmakers looking to expand their capabilities and enhance their presence in the market.
CDMOs, also known as contract manufacturing organizations (CMOs), provide services such as drug development, manufacturing, and packaging to pharmaceutical and biotech companies. This allows drugmakers to outsource these essential services and focus on their core competencies, such as research and marketing.
The CDMO segment has been gaining momentum in the past decade as drugmakers increasingly turn to outsourcing to reduce costs and accelerate drug development. According to a report by Grand View Research, the global CDMO market size was valued at USD 155.3 billion in 2020 and is expected to reach USD 237.6 billion by 2028, growing at a CAGR of 6.2%. This growth is driven by the rising demand for bio/pharmaceuticals, increasing R&D expenditure, and the shift towards outsourcing.
To tap into this growing market, both pureplay CDMOs and traditional drugmakers have been actively engaging in acquisitions and partnerships. These strategic moves not only allow them to expand their capabilities but also facilitate entry into new markets and geographical regions.
One of the recent acquisitions that has made headlines is Thermo Fisher’s USD 17.4 billion acquisition of Patheon, a leading CDMO. This move has allowed Thermo Fisher to enter the high-growth contract development and manufacturing market and strengthen its position as a one-stop-shop for drug development and production.
Similarly, in 2020, Cambrex, a leading CDMO, was acquired by Lonza, a Swiss multinational company specializing in pharmaceuticals and biotechnology, in a deal worth USD 2.7 billion. This acquisition has expanded Lonza’s capabilities in small molecule APIs and drug product development, making it a key player in the CDMO segment.
In addition to acquisitions, partnerships between CDMOs and traditional drugmakers have also been on the rise. These partnerships allow traditional drugmakers to leverage the expertise and infrastructure of CDMOs to bring their drugs to market faster and more efficiently. At the same time, CDMOs gain access to a larger customer base and a wider range of projects.
For instance, Pfizer, one of the largest pharmaceutical companies in the world, formed a strategic alliance with Symbiosis Pharmaceutical Services, a CDMO based in Scotland. This partnership will allow Pfizer to expand its manufacturing capabilities and drive down costs, while Symbiosis gains access to a global customer base and advanced drug development technologies.
These acquisitions and partnerships are also fostering innovation in the CDMO segment, as companies strive to stay ahead of the competition. For example, traditional drugmakers are partnering with CDMOs that specialize in innovative technologies, such as continuous manufacturing and personalized medicine, to revolutionize their drug development and production processes.
Moreover, these strategic moves are also driving consolidation in the CDMO market. Smaller CDMOs are now merging with or being acquired by larger companies, creating a more competitive landscape with a few key players dominating the market.
This trend is not only beneficial for CDMOs and traditional drugmakers, but it also has a positive impact on the entire pharmaceutical industry. With the help of CDMOs, drugmakers can bring new and life-saving drugs to market faster and at a lower cost. This, in turn, benefits patients who have access to innovative treatments sooner.
Furthermore, the CDMO segment also provides a significant boost to the economy by creating jobs and stimulating investments in the pharmaceutical sector. This is particularly important in developing countries where the pharmaceutical industry is an emerging market and plays a crucial role in economic growth.
In conclusion, the CDMO segment of the pharmaceutical industry is experiencing rapid growth and attracting new players through acquisitions and partnerships. This trend offers exciting opportunities for both pureplay CDMOs and traditional drugmakers to expand their capabilities, enter new markets, and foster innovation. As the CDMO segment continues to flourish, it will benefit the entire pharmaceutical industry and contribute to the development of life-saving drugs for patients worldwide.
