Contract Manufacturing Organizations (CMO) of Increasing Importance to Global Pharmaceutical Companies #galapagos #pharma

Posted On Nov 15 2017 by

#contract pharmaceutical companies


Contract Manufacturing Organizations (CMO) of Increasing Importance to Global Pharmaceutical Companies

February 29, 2016 54 отметки «Нравится» 5 комментариев

The pharmaceutical marketplace has changed dramatically over the last few years as pharmaceutical companies are moving from centralized, internal production to single-source providers or Contract Manufacturing Organizations (CMO). The principal reason behind this evolution in the landscape is simple to cut costs, increase capacity and reduce time-to-market. Beyond these obvious criteria there are numerous other reasons why pharmaceutical companies are relying heavily on the growing CMO market.

Whereas CMOs once produced primary packaging they now offer a multitude of services from design and discovery to final packaging. Outsourcing to a CMO allows the pharmaceutical company to add technical resources without increasing its overhead costs. The end result of this is that the pharmaceutical company does not need to invest in expanding its staff and manufacturing facilities, in order to add new varieties of medicines into its product lines. Pharmaceutical companies can now concentrate on core products in terms of R D and production and leave its secondary and tertiary products to the CMO.

The term CMO can refer to a multitude of different companies including Contract Packaging Organization, Contract Pharmaceutical Manufacturer. However, in recent years CMOs have been more or less classified into two types of organizations:

API Contract Manufacturer (Active Pharmaceutical Ingredient) – These are companies that manufacture a substance(s) that are used as a component of a finished drug.

FDF Contract Manufacturer (Finished Dosage Form) These are companies that provide a drug product for administration to a patient without the need for substantial further manufacturing and often in its final packaged form.

The CMO market is currently divided almost equally between API manufacturers and FDF manufacturers. Within FDF contract manufacturing, solid dose compounds currently dominate the market. However, future growth is likely to be driven by injectables dose manufacturing primarily due to increased focus on complex disease areas and the growing trend of self-administration.

In terms of market growth and potential future growth, the CMO channel is a force to reckon with. For North America, Europe, and Japan in the last three years, the CMO market grew at close to three times the rate of the pharmaceutical market: 8% versus 3%. (It is important to note that the 3% growth is for the pharmaceutical market as a whole, top Pharmaceutical companies have grown significantly faster at a rate on average of over 11%. It is also important to note that most large pharmaceutical companies have divisions operating as CMOs)

Over the next five years the CMO market is expected to continue to grow at an annual rate of 6% to 9%, with annual revenues currently valued at between 25-30 billion dollars. This growth will be further fueled by new opportunities within the generic drug market .

Challenges for the CMO

Although the CMO seems to be poised to become a major player in the pharmaceutical marketplace several challenges await.

Acquisitions – The trend is already apparent as 2015 saw a glut of companies and manufacturing facilities being acquired. This trend will continue as smaller CMOs are absorbed by larger ones.

Current clients – Smaller pharmaceutical companies use the services of CMOs significantly more than large pharmaceutical companies. The challenge lies in that the growth opportunities are a lot smaller.

Low Capital Costs – With lower capital costs many pharmaceutical companies are rethinking the CMO route in favour of moving back to traditional centralized production.

The future of CMOs

As with any part of the pharmaceutical landscape the role of the CMO will follow a predictable route. The smaller CMOs will be absorbed by larger ones, and the large CMOs will come forward to be the only players to be able to support the large Pharmaceutical and Biopharmaceutical companies. New channels will open within the generic pharmaceutical marketplace fostering further growth for the large CMO.


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Last Updated on: November 15th, 2017 at 11:56 am, by

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