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European Pharmaceutical and Biotech Contract Manufacturing Markets
Frost & Sullivan, Dec 2011, Pages: 214
Outsourcing becomes Increasingly Entrenched as a Strategic Manufacturing Option for Big Pharma
Increasingly, big pharma is viewing the outsourcing of pharmaceutical manufacturing as a strategic move that would enable them to focus on their core competencies such as R&D. At the same time, the patent expiry of key blockbuster drugs worth $45 billion and biologics worth $30 billion is expected to reduce the capacity utilisation rates of their manufacturing facilities, thereby making outsourcing a viable option for pharmaceutical and biotech companies. “As pharmaceutical and biotech companies strive to enhance their internal core competencies, outsourcing is likely to become increasingly entrenched as a strategic manufacturing option,” notes the analyst of this research. “The impact of the economic crisis, coupled with the poor performance of the venture capital industry in Europe, has underlined the popularity of contract manufacturing as it has become synonymous with cost-cutting and the timely entry of products into the market.”
In parallel, with several blockbuster drugs of large pharma and biotech companies coming off-patent, the utilisation rates of manufacturing plants are likely to reduce by half. This is set to trigger an increase in outsourcing of manufacturing by big pharma companies. Currently, big pharma companies contribute between 10 to 25 per cent of the total revenues of contract manufacturing organisations (CMOs) in Europe. Frost & Sullivan anticipates such figures to rise to 40.0 per cent by 2013, and up to 50.0 per cent by 2018.
Focus on Technology Innovations to Propel CMOs to Forefront
Stringent regulatory requirements are likely to place pressure on CMOs. As the regulatory environment in Europe becomes progressively stricter owing to contamination issues, safety compliance and drug recalls, the costs of gaining regulatory approvals will make up a major chunk of fixed costs for CMOs. Despite this challenge, market prospects are extremely buoyant. Frost & Sullivan projects the European pharmaceutical contract manufacturing market to grow at a compound annual growth rate (CAGR) of 10.9 per cent from 2011-2018, with its biotech counterpart poised to register a compound annual growth rate of 12.1 per cent over the same time frame.
“Although the demand for manufacturing capacity is rising, a careful weighing of benefits and risks is required by CMOs while planning capacity expansions lest they be hit by over capacity, which, in turn, could lead to the acquisition of smaller CMOs by larger ones,” cautions the analyst. “Promisingly, there is tremendous untapped potential for CMOs which are properly positioned and at the forefront of technology in the capital-intensive and technology-driven contract manufacturing market.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Solid dose formulations in pharmaceutical contract manufacturing
- Liquid dose formulations in pharmaceutical contract manufacturing
- Injectable dose formulations in pharmaceutical contract manufacturing
- Mammalian cell culture-based products in biotech contract manufacturing
- Microbial cell culture-based products in biotech contract manufacturing
This Frost & Sullivan research service titled European Pharmaceutical and Biotech Contract Manufacturing Markets provides a comprehensive overview of market drivers, restraints and challenges faced by industry participants. The base year is 2011 with forecasts until 2018. The segments covered include: solid dose formulations, liquid dose formulations and injectable dose formulations in pharmaceutical contract manufacturing together with mammalian cell culture-based products and microbial cell culture-based products in biotech contract manufacturing.
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