Most CMOs see signs of recovery in the biotechnology industry; however, there is concern about industry consolidations and the general pharmaceutical market environment. Overall, CMOs are sanguine about the future. Some of this optimism results from an increase in the number of requests for proposals from virtual and early-stage biotechnology companies as well as customers returning for second and third projects.
Bansi Bhan, interim CEO of GBI, says that “the recent decline in the financial markets and economic contraction has certainly adversely impacted the biopharmaceutical contract manufacturing market. The financial meltdown resulted in a lot of companies reducing the demand for CMO services. In addition, the lack of venture capital funding in small to medium companies resulted in project cancellations and delayed commitments. Despite the market downturn, we feel that the long-term outlook remains positive.”
CMC Biologics is also confident about the industry’s future. “CMC Biologics is optimistic that the biologics CMO market will rebound and grow over the next several years, largely as a result of an increasing proportion of biologicals in the pharmaceutical pipeline and an expected increase in the biosimilars market,” Glassell reports.
Overall, CMOs expect the industry to grow 10% from the prior year. In addition, two-thirds of CMOs expect double-digit industry growth this year. “Considering the CMO segment of the biopharmaceutical industry, we expect continuing double-digit growth in the area of product development, while revenue from the production of marketed products will grow at a reduced pace,” Dr. Wolf says.
CMOs chalk up the growth in the biopharmaceutical contract manufacturing market to a number of factors. Many CMOs mention that biologics are the fastest growing segment of the pharmaceutical market, and that biopharmaceutical companies continue to outsource more of their production as they divest themselves of manufacturing facilities and concentrate more on R&D.
Other biotechnology trends that support the growth of biopharmaceutical contract manufacturing services include the expanding market for biosimilars and biobetters, increasing interest in personalized medicine, and increasing globalization of biotechnology demand.
Lonza reflects the optimism in the industry. “We remain optimistic as the outsourcing option seems more viable than ever in helping companies to manage risks,” Chu says. “We have observed evidence that many big pharmaceutical companies have divested manufacturing facilities and adopted outsourcing as one of their key corporate strategies.”
The increased focus on biologics in the pharmaceutical companies’ pipeline is also a reason for optimism. “Customers are more cautious and focus their investments on advancing their biologics lead candidates rather than expanding the pipeline (in particular, small to medium-sized biotechnology companies). As a result, there will be new products reaching the market that will feed the CMO lines,” Dr. Maier comments.
Another reason for optimism in the CMO industry is the emerging biosimilar and biobetter market. An increase in globalization is also being observed by CMOs. “Where, traditionally, the requests for larger scale CMO services came from the U.S., West-EU, and Japan, we now see more and more requests coming from other Asian countries, East-EU, BRIC, and Pacific countries,” Oomen reports. “We expect in the coming years that this globalization trend will accelerate further. As a result of further globalization, the CMO companies need to prepare accordingly and act more globally as well.”