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Global CMO market to cut costs by outsourcing production to Asia

Industry Sector

Healthcare and Medical

Published

5 November 2012

Author

Mike King

Type of News

Market

The global contract manufacturing organisations (CMO) market has been forecast to increase at a compound annual growth rate (CAGR) of 11% through to 2018, reaching a market value of $59.9 billion. The industry is set to grow steadily, due to increasing levels of pharmaceutical outsourcing and generic manufacturing.

CMOs are set to progressively become more and more popular, as Western pharmaceutical companies outsource production to Asian countries in a bid to cut costs. Overall cost of drug manufacturing is up to 50% cheaper in India than in Western countries, which is pushing Big-Pharma abroad.

CMOs provide independent manufacturing services for pharmaceutical and biotechnological markets. CMOs have evolved from initially providing basic manufacturing services to providing a wide range of services that suit the demand of the market and the outsourcers, they are equipped with the required expertise, resources, technologies and tools as a viable option to save cost and time.

Major CMOs offer upstream and downstream manufacturing functions equally; and, in addition to manufacturing in biopharmaceutical production, they also offer clinical trials, logistics, packaging, and even marketing.

The US CMO market is the largest market for pharmaceutical contract manufacturing, having generated approximately $10.7 billion in revenues in 2011. The industry is then expected to grow at 7% to 9% until 2016.

The expansion of the CMO market is being driven by the steady growth of the US pharmaceutical industry, as well as increased outsourcing of large pharma companies that are focusing on core competencies to improve profit margins. The US will continue to face a challenging economic environment in the near future.

The priority of these points of competition will shift slightly depending on segment of the industry. Price will be a significant factor in determining contracting for solids, but quality and proprietary platforms become more important in sterile manufacturing services.

For more information on the global CMO market, see the latest research: Global CMO Market

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