Are We Witnessing A New "Age Of The CDMO"?

By Paul J. Cummings, PJC Pharma Consulting Ltd.

Across the life sciences industry, we are seeing the need for cost-effective solutions to ever more difficult development challenges that are growing in parallel with rising production costs.

The use of contractors by the pharmaceutical industry, specifically in the development and manufacturing spheres, in the past five to 10 years has increased substantially.¹ This marks a significant shift in manufacturing strategy, internal versus external capacity, and investment by many companies. According to 2023 data, a vast majority of biopharma companies are continuing to rely on outsourcing for biopharmaceutical manufacturing.² This shift into the wider use of external resources such as CDMOs is ongoing and the use of CDMOs, in my experience, has become more of an extension of capability, almost a partnership at times, and continues to evolve.

The global pharma industry was estimated to be in the region of $1.5 trillion in recent years³ and is continuing to grow. The global contract manufacturing market is estimated to be worth $176 billion last year and is forecast to grow to approximately $258 billion by 2028, a significant proportion of the overall market. So, while pharmaceutical companies’ internal capabilities decline, the reliance on CDMOs will continue to grow.

The change we see now, in both Big Pharma well as smaller companies, is the move to outsource more projects to contract manufacturers and, more recently, even process development laboratories, freeing up internal resources in both capital and staffing. In addition, the growth in the emergence of smaller biotech and startups is adding to this trend and the resource switch to a CDMO model.

What Are The Primary Factors Driving This Increased Use Of CDMOs?

• Cost: Demand for pharmaceuticals is ever increasing, never decreasing. To keep up with this demand, pharmaceutical companies have been tasked by shareholders with high fiscal return expectations, and a large contributing factor is the cost of facilities and equipment in addition to the highly qualified staff to run these facilities. When you add in the complexities of developing new pharmaceutical products, sometimes utilizing expensive or niche technologies, this financial burden becomes significant. Outsourcing the drug development and manufacturing process to a CDMO allows companies to achieve significant cost savings by removing the need for capital expenditure with a new or modified facility and the cost of staffing and systems development associated with development and manufacture of drug products.⁴
• Regulatory compliance: CDMOs are experienced in dealing with regulatory authorities around the world and can ensure that the drug development process complies with all relevant regulations.
• Novel and emerging technologies: One significant trend is the increasing importance of technological capability. Some CDMOs have developed niche technologies and specialist or bespoke equipment that is their own intellectual property and, therefore, unique.⁴ As drug development processes become more complex, having access to advanced technologies and specialized equipment is becoming a key differentiator for CDMOs. Pharmaceutical companies are increasingly looking for partners who can offer innovative solutions to their complex challenges. Many good CDMOs have suitable investment in technology also have invested in robust quality management systems.
• Commercialization: Of particular interest to startup or virtual companies is the access a CDMO gives them to facilities and expertise in drug development processes, helping small and large pharmaceutical companies bring their products to market quicker for product realization and patient benefit.
• Specialist services: As pharmaceutical companies continue to explore new therapeutic areas, they require partners with specific expertise in these areas. This is leading to a rise in specialized CDMOs that offer services tailored to specific therapeutic areas or technologies. Small batch manufacturing, proof-of-concept materials, combination products, personalized medicine are no longer the prerogative of Big Pharma. The growth in the specialist CDMO market has been extraordinary; the level of investment and technical development has enabled many companies, of all sizes, to realize products within a time frame that otherwise would have been prohibitive due to immediate cost, redevelopment of existing facilities, or even just internal company politics.
• Supply chain security and resilience: The use of alternate CDMOs early in product qualification gives a client a secondary supply chain in instances of stockouts at a primary manufacturer or when unforeseen demand arises. The use of secondary supply chain strategies early in a product life cycle gives both the client and the patient a security of supply and is a rationale that makes sound business sense.

What Does The Future Hold In 2025 And Beyond?

As we move into 2025 my belief is that we will continue to see substantial growth within the CDMO sphere. The role of CDMOs and their relationship to client companies will continue to evolve, especially with the use of specialist companies with unique or niche technologies. The expanding biotech product base and virtual startups with no facilities will continue to drive the emergence of new CDMOs and facilitate established CDMOs in enhancing their product offerings and technological advantages versus other CDMOs. This will alleviate the need for significant investment by client companies in their own internal capabilities, thus saving both client capital expenditure and increasing the potential speed to market. The ultimate beneficiary will be patients, who will receive efficacious and, in many cases, novel treatments faster than a more traditional internal company model of development and manufacture would allow.

I foresee that the abovementioned trends are not going to change in the year ahead. Anyone who currently uses a CDMO already knows that the challenge is not only finding a good CDMO, but now the primary issue is finding one with capacity to take on a new product and be ready to manufacture in alignment with the client’s project expectations!

Companies large and small will continue to outsource development and manufacturing operations to quality CDMOs that have the capacity, equipment, expertise, and resources that many Big Pharma used to take for granted as internal resources. This change in approach to development and manufacture is a significant shift and one that I predict will continue to grow for years to come. The CDMO sector’s investment in emerging technologies, innovative techniques, and supply chain simplification and management makes this an ever-attractive proposition to pharmaceutical sponsors to speed their products to market and leverage every advantage they can.

As the pharmaceutical industry continues to consolidate, globalize, and refine portfolios, CDMOs with a global presence will be better positioned to serve these clients. This includes having manufacturing facilities in key markets, as well as understanding the regulatory landscape in these markets.

When used wisely, a CDMO can be an essential partner for bio/pharmaceutical companies, providing quality, comprehensive services for drug product life cycles from initial development, through clinical phases, and into commercial manufacture. In essence, it is an extension of the client company’s capabilities. However, as with all outsourcing, this should be done with due consideration of quality and expertise to result in the timely provision of a quality drug product. The extension of the contracting company’s capabilities results in its ability to refocus on other core areas, such as target identification and drug discovery. This is a win-win for the client and the CDMO and a trend that will continue to grow as we move into 2025. The age of the CDMO is truly upon us and can only benefit product development and commercial manufacturing for companies and patients.

References

1. Companies (Bushu Pharmaceuticals Ltd., Nipro Corporation, Thermo Fisher Scientific Inc. and others), Trends and Forecast 2024-2033, https://dimensionmarketresearch.com/report/cdmo-market/#:~:text=The%20Global%20CDMO%20%28Contract%20Development%20and%20
   Manufacturing%20Organization%29,CAGR%20of%207.7%25%20during%20the%20forecast%20
   period%20%282024-2033%29.
2. BioPlan Report and Survey 2023, https://www.bioplanassociates.com/20th/
3. Trends and estimates for the pharmaceutical industry in 2023, https://www.worldpharmatoday.com/news/trends-and-estimates-for-the-pharmaceutical-industry-in-2023/#:~:text=The%20pharmaceutical%20sector%20has%20grown%20quickly%20in%20recent,
   intelligence%20%28AI%29%2C%20the%20sector%20is%20undergoing%20a%20transition.
4. The Future Of Contract Manufacturing For The Pharmaceutical Industry, https://ispe.org/pharmaceutical-engineering/ispeak/future-contract-manufacturing-pharmaceutical-industry. March 15, 2021

About The Author:

Paul J. Cummings, DProf, CBiol, FRSB, CSci, EurProBiol, SRPharmS, is the managing director of PJC Pharma Consulting Ltd, a U.K.-based product development technical consultancy company serving international clients. Cummings has 40 years’ experience across the pharmaceutical industry, having held numerous senior positions in the pharma and biotech industries in the U.K., U.S., and Europe. His experience is in drug product development from candidate selection through to commercial launch and post-launch extensions, with hands-on development experience coupled with a wide range of regulatory agency interactions.