Eric S. S. Langer President and Managing Partner BioPlan Associates

Serious Capacity Problems for CMOs a Thing of the Past

A contract manufacturing organization (CMO) with excess production capacity is like a restaurant with unfilled tables—it points to excess overhead, low profitability, and poor planning. Yet full capacity can sometimes be worse in the long run through lost business and permanently unhappy clients. So CMOs balance their capacity to ensure future growth and long term demand. And when properly managed, moderate capacity constraints can be a healthy indicator of efficient operations. 

Our 2015 Annual Biopharmaceutical Manufacturing Survey, however, shows that CMOs in U.S. and Europe are hitting limits of what may be considered a healthy level of excess (flex) capacity. This is particularly the case for mammalian cell culture – the dominant platform.  In our study, CMOs this year estimated they are operating at an average 82% of their total capacity.  This is a hefty increase from last year’s average of 58% capacity utilization. The last time we saw levels in this range were 10 years ago during what was often referred to as an industry-wide capacity crunch.

CMOs’ success is partly the result of industry maturation and experience in scheduling, managing the pipeline products, and clients’ expectations.  In addition, the biopharma industry continues to see a robust rate of new product approvals.  Overall, outsourcing of biomanufacturing has been on the rise and CMOs have honed their ability to keep up with demand. Thus, CMO constraints are not necessarily an unhealthy indicator.  And results from this year’s study show CMOs are also very optimistic regarding management of their capacity in the future, as they invest in capacity improvements. 

Our global study of 237 biopharmaceutical manufacturers and CMOs shows, for example that while only around 10% of biotherapeutics developers will experience significant constraints, over one-third of CMOs are experiencing at least “significant” production capacity constraints.  And while these numbers are up substantially from last year, they’re still anecdotally being pegged at reasonably healthy capacity levels.

So the question should be whether the current CMOs capacity pinch is necessarily bad news, or is it an indication of efficient project management, that is to be followed by a period of expansion. 

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Figure 1. Capacity constraints, biotherapeutic developers vs. CMOs [12th Annual Report and Survey of Biopharmaceutical Manufacturing, April 2015,]

Eric S. Langer ( is president and managing partner at BioPlan Associates. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing”, and many other industry reports.