Contract Pharmaceutical Manufacturing Market To Witness Significant Growth Due To Rise In Offshoring By Pharmaceutical Companies

The contract pharmaceutical manufacturing market involves the outsourcing of various pharmaceutical production and manufacturing steps by pharmaceutical companies to contract manufacturing organizations (CMOs). Contract pharmaceutical manufacturing services include active pharmaceutical ingredient (API) manufacturing, final dosage formulation, tablet pressing and capsule filling, bottling and labeling. The need for CMOs is driven by the pharmaceutical companies' need to focus on drug discovery and increase productivity. Outsourcing manufacturing to CMOs enables pharmaceutical companies to gain access to advanced manufacturing infrastructure, reduce costs, and optimize manufacturing operations.

The global contract pharmaceutical manufacturing market is estimated to be valued at US$ 116.88 Mn in 2024 and is expected to exhibit a CAGR of 7.7% over the forecast period from 2024 to 2030.

Key Takeaways

Key players operating in the contract pharmaceutical manufacturing market are Accenture plc, Belden Inc., Cisco Systems, Inc., Claroty Ltd., CyberX, Cyberbit, Darktrace, Deloitte Touche Tohmatsu Limited, Bayshore Networks, Hitachi Systems Security Inc., Fortinet, Inc., OTORIO Ltd., IBM Corporation, Dragos, Inc., Indegy, IOActive Inc., Kaspersky Lab, Leidos, Thales Group, Wurldtech Security Technologies Inc., Honeywell International Inc. (NextNine Ltd.), Nozomi Networks Inc., and NCC Group. Pharmaceutical companies are increasingly outsourcing manufacturing operations to reduce costs and gain access to advanced infrastructure which is creating key opportunities for CMOs. CMOs are also seeing increased opportunities in markets like China, India and Europe owing to growing demand and emergence of local pharmaceutical manufacturing capabilities. Many CMOs are exploring global expansion through greenfield projects and acquisitions to tap international opportunities.

Market Drivers

The key driver for the Contract Pharmaceutical Manufacturing Market Demand is the increasing offshoring of pharmaceutical production and manufacturing by large pharmaceutical companies. This is driven by the need for pharmaceutical companies to focus on higher value drug discovery while reducing manufacturing costs. Outsourcing to CMOs enables them to leverage industrial scale, advanced infrastructure, and expertise of CMOs. Rising need for generic drugs due to patent cliffs is also fueling demand for CMO services from generic drug developers.

Market Restrains

The key restrain in the contract pharmaceutical manufacturing market is the complexity of technology transfer from client companies and ensuring compliance with regulatory standards. Outsourcing also raises issues around data security, confidentiality and intellectual property that needs to be addressed. Dependence on single CMO partners also increases supply chain risks that client companies need to manage. Stringent regulatory environment and concerns around quality can also limit outsourcing in certain markets.

Segment Analysis
The contract pharmaceutical manufacturing market is dominated by the sterile injectables segment, which accounts for over 40% share of the overall market. This is because sterile injectables require high capital investments for facilities along with stringent regulatory compliances. Contract manufacturing provides outsourcing opportunities for companies to focus on their core competencies rather than investing in sterile injectables manufacturing facilities. The oral solid dose segment is the second most dominating segment owing to higher demand for tablets and capsules for therapies across various chronic diseases. Generics play a major role in this segment, thus driving its growth.

Global Analysis
North America dominates the global contract pharmaceutical manufacturing market currently holding over 40% share. This is attributed to presence of majority of top pharmaceutical companies that heavily rely on outsourcing for manufacturing non-core products in the region. Europe holds the second largest share on back of contract manufacturing being common practice among large pharmaceutical firms based in Germany, UK, and France. However, Asia Pacific is emerging as the fastest growing regional market. This growth can be accredited to low cost of operations, growing pharmaceutical industry in countries like India and China, shifting of manufacturing facilities from developed regions, and strengthening of regulatory environment.

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