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Business & Regulation Small Molecules

Trusted Partners?

Growing demand for medicines, the capital-intensive nature of drug manufacturing, and complex requirements are leading pharma companies to become increasingly reliant on CDMOs. In turn, this has contributed to increased profitability for the outsourcing sector. In 2019, the CDMO market was valued at $150.7 billion and is expected to reach $246.2 billion by 2025 (1). In many cases, pharma companies prefer to spend on in-house R&D technologies and then invest in outsourcing partners with state-of-the-art facilities to take care of the manufacturing side.

The report covers a number of interesting topic areas.

API manufacturing

Demand for API manufacturing has seen a sustained rise, with patent expiries fuelling an increase in generic production capacities. Growth is also being driven by the increasing emphasis on high potency APIs is driving the growth of the segment - with the report adding that novel technologies for HPAPI production could potentially change the balance of power amongst CMOs. Captive manufacturers currently leading the API market, but are slowly expected to lose their market share to contract manufacturers towards 2024 because of the complexities and expensive nature of in-house API manufacturing.

Threat of consolidation

Consolidation is a key trend in the pharma industry with many large pharma companies acquiring or merging with other organizations as patents expire. This consolidation represents a threat to CMOs because of the shrinking client market.

However, with many large pharma companies continuing to scale back on manufacturing, opportunities are still expected in both small molecule APIs and biologics. 

CMO selection

When looking for outsourcing partners, pharma companies take into account: 

  • Proven regulatory track records
  • Ensured confidentiality and security
  • Manufacturing capacity
  • Overall quality
  • Personnel background

A CMO’s reputation in the industry, cost competitiveness, specialized expertise and proprietary technologies also factor into selection criteria.

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  1. Mordor Intelligence, “Pharmaceutical contract development and manufacturing organization- Growth, trends and forecasting (2020-2025),” (2019). Available at
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