Strategic partnerships driving consolidation of CDMO industry, says report

Strategic partnerships driving consolidation of CMO industry

Growth of Pharma strategic partnerships with contract development and manufacturing organisations (CDMOs) is driving consolidation, according to an industry report.

Global CDMO revenues reached just under $39bn (€29bn) in 2013 (not including $9bn of sales from pure-play API manufacturers) and - driven by pharma continuing to reduce its fixed costs through outsourcing, coupled with the growth of virtual biotech and pharma firms - is set to grow 24% to $48bn by 2015, according to a new market report by mergers & acquisitions advisory services firm 11T Partners.

From 2013 figures, the industry is reported to be made up of ten companies who hold a 26% share of the market (Catalent, Lonza and Aenova named the top three), with the next ten largest contributing a further 10%, and approximately 175 leading CDMOs making up the rest.

However, the March 2014 $2.65bn merger of Patheon and Royal DSM’s Pharmaceutical Products division created one of the largest CDMOs, DPx, and according to the report, the “fragmented nature and growth of strategic partnerships with customers suggests further consolidation.”

Whilst the trend for pharma to form strategic partnerships with contract research organisation (CROs) is well-established, such a shift from short-term sponsor-supplier contracts is beginning to become more prevalent in the CDMO industry.

DPx’ President of Pharmaceutical Development Services (PDS) Mike Lehmann told this publication in March that client discussions have moved away from basic operational contracts to be more strategic, though he was seeing small and mid-tiered pharma firms driving the change.

His comments were mirrored by ex-Director of External Supply at GSK, Jim Browne, though speaking at the recent Global Pharmaceutical Contract Manufacturing (GPCM) conference in London, UK, told delegates that strategic partnerships were “where most big pharma companies would like to go.”

Stages of development

The report also detailed on the penetration of outsourcing across the drug development process.

“Process Development and Formulations are growing industries due to increased number of biological and specialty products in the market,” it said, whilst API production is approaching maturity, with a 50-60% penetration rate.

Furthermore, 58% of current CDMO utilisation are for phase I/II scale-up and small manufacturing and packaging projects, 22% commercial manufacturing, 18% Phase III, and just 2% preclinical.

Related News

Gallus' St Louis, Missouri, plant adds "one of the biggest players in the 2,000L space" to CDMO Patheon

Patheon propels itself into US biologics market in Gallus acquisition

Patheon: Expediting supply of Ph I trial drugs can cut pharma costs

Patheon: Expediting supply of Ph I trial drugs can cut pharma costs

Pharma's demands from manufacturing partners more complex from the start, say Catalent and DPx

CDMO strategic deals 'the new standard,' say Catalent and DPx, but big and small pharma demands differ

The funds will help to grow the company further

CDMO Paragon Bioservices raises $13m in financing

Harvard Medical School: the alliance will help translate university discoveries into drugs

BMS-backed biopharma in pact with preclinical R&D experts

End-to-end service, but is this a good direction for CDMOs to go?

One-stop-shop CMOs could fall into pharma's over-capacity curse, say experts

Catalent positioned well to prosper from ongoing consolidation in CDMO industry

Catalent: Q4 currency glitch but CDMO to gain from consolidation trend

photo - iStock pichet_w

Strategic CRO relationships no more effective than traditional models, Tufts

Image: iStock/Jezperklauzen

Amgen selects Patheon as a 'strategic' manufacturing partner

Patheon's Swindon, UK plant was earmarked for closure in 2012

Shift to CMO strategic alliances key to UK plant turnaround, says Patheon

Patheon and DSM merger. Signs of consolidation in the CMO industry?

CMO future? Consolidation and strategic alliances, says Patheon/DSM Exec

Aesica predicts more CMO consolidation and hints at acqusitions

Aesica predicts more CMO consolidation and hints at acquisitions

CMO QA audits: necessary and beneficial to all, says consultant

CMO quality audits: necessary and beneficial to all, says consultant

Baxter Q2: Drop in demand hits CMO biz, despite overall sales growth

Baxter Q2: Drop in demand hits CMO biz, despite overall sales growth

GPCM conference venue: Pestana Chelsea Bridge Hotel, London, UK

For big pharma, ten is the magic number of CMOs says ex-GSK Director

Related Products

See more related products