The CMO Market Outlook: Emerging markets, key players and future trends

Report Description:

Falling productivity and patent expiries are placing increasing pressure on pharmaceutical companies to reduce fix costs including large manufacturing facilities. Sponsors are turning to CMOs in search of time and cost savings and as a way to flexibly manage outsourced manufacturing. Meanwhile the threat of overcapacity combined with inevitable program cancellations following mega-mergers resist the market. The CMO Market Outlook analyzes the market dynamics, drivers and resistors and assesses the structure of the market. China and India are discussed as destinations for outsourced manufacturing including analyses of regulatory changes and patent protection. Industry strategies are detailed and critically examined. Key players in the global, Chinese and Indian markets are also assessed. The industry trends are examined and used to map out the future of the industry including the impact on the landscape of players.

Key features of this report

 Sizes the CMO market, including a breakdown of primary secondary and biomanufacturing with forecasts to 2014.
 Details market drivers and resistors against the background of pharmaceutical market dynamics.
 Separate forecasts to 2014 of the Chinese and Indian API and finished dose markets.
 Profiles the key global players in the CMO market as well as those in China and India.
 Examines key industry strategies in the context of the market trends.
 Reveals trends and their effects on the future of the industry

Key benefits from reading this report

• Save time and money in research with the report’s up to date review and analysis of all the important trends in contract manufacturing.
• Develop deeper insight into the size and growth of the global CMO industry by utilizing the report’s market forecasts.
• Assess your organization’s outsourcing strategy and understand how manufacturing costs can be reduced in the future by forming alliances with CMOs and moving manufacturing to offshore destinations.
• Identify the leading players in the CMO market, including Indian and Chinese providers.
• Anticipate where the future CMOs will be placed and make your outsourcing decisions as effective and economical as possible by understanding the current and future contract manufacturing industry dynamics.

Key market issues discussed

1. Cost cuts drive outsourcing: Financial pressures brought on by declining productivity and the threat of patent expiries are driving pharmaceutical companies to outsource an increasing range of functions across the value chain.
2. Ensuring regulatory compliance: The sponsor or pharmaceutical company is ultimately responsible for the manufacturing process, whether externally or internally provided. In fact, the FDA considers contract facilities as an extension of the pharma company’s own facility. All facilities involved in the manufacturing or testing of a drug product are required to adhere to the portion of the cGMPs that apply to their operations.
3. Biomanufacturing: An increasing number of top drugs will be biologics, driving up manufacturing demand. Currently, most biomanufacturing capability rests with innovator companies and a few CMOs. Developing resources in this area is a key imperative for CMOs in the future.
4. Strategic outsourcing: The sale of captive facilities means that pharma companies increasingly outsource strategically rather than based on short term need.
5. Globalization / Offshoring to India & China: To become the offshoring destination of choice for drug manufacturing, China and India must comply with Western manufacturing standards to ensure safe and effective drugs. It will have to enforce stronger measurements in controlling domestic suppliers of raw material as well as collaborating more closely with foreign regulatory bodies.
6. While the expanded Asian business potential and outsourcing capabilities offer greater cost-saving and revenue-growth opportunities, Western pharmaceutical companies must carefully navigate the challenges that arise from operating in these regions.Though products made in China and India offer Western pharmaceutical companies attractive price incentives, most Asian CMOs still fail to demonstrate the rigor of regulatory compliance that Western companies demand and their customers expect.

Key findings from this report

The contract manufacturing market was worth $22.2bn in 2009 and will reach $33.7bn by 2014. Biopharmaceutical manufacturing is the fastest growing industry segment.

Sale of captive facilities, cost pressures, the rising number of products in development and the growth of the biopharmaceuticals industry are all driving the CMO market.

Strategic outsourcing often entails establishing longer and deeper relationships with a limited number of providers. Many sponsors are selling their own facilities in order to reduce fixed costs.

North America leads the world in biomanufacturing. Asia’s share of global biomanufacturing facilities is expected to double from 10% in 2009 to around 20% by 2013.

Outsourced manufacturing is shifting from established markets in the West to emerging markets in the East.

Key questions answered by this report

• What will the size and growth of the global CRO market be through 2014?
• Which companies are current and future key players?
• What kind of business relationships will pharma companies and CMOs establish in the future?
• What are the drivers and resistors of the CMO market?
• What will be size and growth of the Indian and Chinese API and finished dose markets to 2014?
• How are Indian and Chinese CMOs placed for the future market?
• How are CMO service offerings evolving?

Table of Contents

• The CMO market outlook

Executive Summary 8

• The contract manufacturing market 8
• CMO market analysis 9
• Emerging regions in the CMO market 10
• Key players in the CMO market 11
• The future of the CMO market 12

Chapter 1 The contract manufacturing market 14

• Summary 14
• Introduction 14
• Current market drivers 18
• Sale of captive plants 18
• Cost pressures encourage outsourcing 18
• Increasing number of products in development 19
• Consolidation in the pharmaceutical industry 20
• Increase in biopharmaceuticals market 20
• Growth of emerging pharmaceutical markets 21
• Current market restraints 22
• Overcapacity 22
• Financial pressures 22
• Increased competition - low barriers to entry 23
• Conclusions 25

Chapter 2 CMO market analysis 28

• Summary 28
• Introduction 29
• Primary manufacturing 30
• Secondary manufacturing 30
• Structure of the CMO market 31
• Advantages of small and medium sized vs. large CMOs 34
• Industry strategies 36
• Strategic outsourcing 36
• Diversification 38
• Biopharmaceutical manufacturing 38
• Overcapacity 41
• Pilot plants 41
• Conclusion 42

Chapter 3 Emerging regions in the CMO market 44

• Summary 44
• Introduction 45
• China 45
• Drivers of the Chinese contract manufacturing market 47
• Challenges of the Chinese contract manufacturing market 48
• China’s regulatory framework 50
• Intellectual property protection 51
• Counterfeit drugs 53
• China’s major contract manufacturing organizations 54
• CMOs offering finished drugs services 56
• Biopharmaceutical contract manufacturing in China 57
• India 57
• Size of the Indian CMO market 59
• Patent situation and implications for foreign direct investment 61
• Challenges in current patent law 62
• India as a preferred offshoring destination 63
• The new, integrated business model of Indian CMOs 64
• Challenges facing the CRAMS business model 68
• Expansion strategies of India’s major contract manufacturing organizations 68
• Conclusions 70

Chapter 4 Key players in the CMO market 74

• Summary 74
• Introduction 75
• Methodology 75
• Catalent 75
• Company profile 75
• Business description 75
• Partnering collaborations and recent deals 76
• Lonza 76
• Company profile 76
• Business description 77
• Partnering collaborations and recent deals 77
• Boehringer Ingelheim (BI) 77
• Company profile 77
• Business description 78
• Partnering collaborations and recent deals 78
• DSM 78
• Company profile 78
• Business description 79
• Partnering collaborations and recent deals 79
• Evonik 79
• Company profile 79
• Business description 79
• Partnering collaborations and recent deals 80
• Patheon 80
• Company profile 80
• Business description 80
• Partnering collaborations and recent deals 81
• Jubilant 81
• Company profile 81
• Business description 82
• Partnering collaborations and recent deals 82
• BASF 82
• Company profile 82
• Business description 83
• Partnering collaborations and recent deals 83
• Fareva 83
• Company profile 83
• Business description 83
• Partnering collaborations and recent deals 84
• Wockhardt 84
• Company profile 84
• Business description 84
• Partnering collaborations and recent deals 84

Chapter 5 The future of the CMO market 86

• Summary 86
• Introduction 86
• Strategic partnerships 87
• Biomanufacturing 88
• Disposable equipment 89
• Offshoring 90
• Market outlook 94
• Chapter 6 Appendix 96
• Selected bibliography 96
• Index 97

List of Figures

• Figure 1.1: Contract manufacturing market ($bn), 2006-14e 15
• Figure 1.2: Pharmaceutical manufacturing process 16
• Figure 1.3: Services performed by CMOs and CDMOs 17
• Figure 1.4: Number of FDA approvals (NCEs), 1990-2008 19
• Figure 1.5: Number of products in development by phase, 1998-2009 20
• Figure 1.6: The contract biomanufacturing market ($bn), 2009-14e 21
• Figure 2.7: Stages of pharmaceutical manufacturing 29
• Figure 2.8: Outsourced biological vs. non-biological manufacturing market, 2009-14e 34
• Figure 2.9: Sponsors employing strategic outsourcing (%) 37
• Figure 2.10: Installed bioreactor capacity (KL), 2006-13e 39
• Figure 2.11: Geographical distribution of bioreactor capacity (%), 2008-13e 40
• Figure 3.12: Share of pharmaceutical sales growth by region, 2006-09f 45
• Figure 3.13: Chinese API exports, $bn 2007-14e 46
• Figure 3.14: Chinese finished form pharmaceuticals exports 2007-14e, $bn 47
• Figure 3.15: India’s finished dose exports ($bn), 2007-14e 60
• Figure 3.16: India’s API exports ($bn), 2007-14e 60
• Figure 3.17: Indian CRAMS market ($bn), 2007-14e 67
• Figure 3.18: Three waves of Indian opportunity 71
• Figure 5.19: Expectations of outsourcing expenditure change, 2009 94

List of Tables

• Table 1.1: New entrants in the pharmaceutical CMO market 23
• Table 2.2: Structure of the CMO industry 32
• Table 2.3: Cost of inaccurate capacity planning 41
• Table 3.4: Selected partnering agreements with Chinese manufacturers 56
• Table 3.5: Selected contract manufacturing/ research deals in India 64
• Table 3.6: Strategic options for Indian pharmaceutical companies 66