Healthcare Contract Manufacturing Market Size, Share & Trends Analysis Report By Type (Medical Device, Pharmaceutical), By Region (North America, Europe, Asia Pacific, Latin America, MEA), And Segment Forecasts, 2021 - 2028

Report Overview

The global healthcare contract manufacturing market size was valued at USD 177.9 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 7.7% from 2021 to 2028. An increase in offshoring to emerging countries and the changing regulatory landscape are the prominent trends currently present in the market. Pharmaceutical and medical device companies are outsourcing low-end services to third parties (CMOs) to reduce the overall cost of production and speed time to market the products. This trend is expected to contribute to the growth of the contract manufacturing market in the foreseeable future. The presence of end-to-end service providers that are engaged in providing value-added services for an integrated or risk-sharing business model is expected to boost the market growth. Pharmaceutical and medical device companies are outsourcing manufacturing activities to CMOs to reduce their manufacturing footprint. It allows manufacturers to be more dynamic and cost effective in their manufacturing process.

In addition, the increasing prevalence of noninvasive surgical procedures is driving demand for pharmaceutical drugs and medical devices. To meet such increased demand, OEMs are outsourcing manufacturing of non-core manufacturing activities as it assists them to reduce labor costs, free up capital, increase worker productivity, and improve manufacturing lead times. For many large, medium and small pharma firms, outsourcing turns out to be an economic option as a fixed cost for manufacturing biologics product account for around 60% - 70% of the cost of goods sold (COGS) and cannot be avoided even during idle conditions. Therefore, the use of multi-product facilities to produce biologics has been proven economically efficient and safe as there is negligible to no risk with respect to product carryover, thereby supporting market growth.

The COVID-19 pandemic has forced many pharmaceutical and medical device companies to increase the manufacturing of drugs and medical devices needed by infected patients worldwide. The U.S. FDA has observed that over 60% of FDA-regulated products imported from China are medical devices, making the U.S. medical device industry highly dependent on China’s supply chain. Medical device manufacturers are facing severe supply bottlenecks, which will ultimately reduce the company’s scope of revenue generation.

Since the medical device industry is highly regulated, making rapid changes in the supply chain may not be manageable. Medical device manufacturers distributing products in the U.S. are not required to report actual or potential supply chain shortages to the FDA. Despite this, the FDA is actively addressing potential shortages in the medical device supply chain. Some of the products facing shortage are aluminum products, integrated circuits, lithium-ion batteries, and special components, including pneumatic fittings, black body radiation source, and platinum.

This has created an unprecedented demand for the manufacturing of active pharmaceutical ingredients (APIs), finished doses, and medical devices in order to maintain supply. According to Medical Product Outsourcing, manufacturers expect outsourcing to yield cost savings and faster time to market. According to various reputed tabloids, companies are expected to outsource more work, based on a 2020 Global Managed Services Report. This report has performed a survey with 1,250 executives across 29 countries, which stated that 45% of organizations will outsource more in the coming years. However, the limited production capacity of the CMOs may pose a major challenge restraining the market growth.

Type Insights

Based on type, the industry is segmented into pharmaceutical and medical device, wherein the pharmaceutical segment accounted for the largest revenue share of 75.2% in 2020. The medical device segment is further divided on the basis of service and therapeutic area. The service segment includes accessories, assembly, component, and device manufacturing. The device manufacturing segment is anticipated to dominate the contract manufacturing market over the forecast period owing to the increasing outsourcing of device manufacturing due to lack of in-house manufacturing facilities and complexity. On the basis of therapeutic area, the medical device segment is segregated into cardiology, diagnostic imaging, orthopedic, IVD, ophthalmic, general and plastic surgery, drug delivery, dental, endoscopy, diabetes care, and other areas.

The cardiology segment held the largest share in 2020. Rising demand for cardiovascular devices as a result of increasing cases of associated conditions is contributing to the growth of outsourcing of these devices. Moreover, the high complexity of cardiovascular devices and the need for technical expertise result in higher outsourcing of these devices.

The pharmaceutical segment is divided by service into Active Pharmaceutical Ingredients (APIs), advanced drug delivery formulations, packaging, and finished dose formulations. Being the key component in drug development, APIs captured the largest share in 2020 and are expected to witness significant growth over the forecast period. Several companies are opting for the outsourcing of drug development due to limited capacity, insufficient resources, lack of skilled professionals, and cost saving. Various CMOs offer customized services. Services offered by CMOs range from the manufacturing of API/bulk drugs to finished dose formulations.

Regional Insights

Asia Pacific (APAC) accounted for the largest revenue share of 45.1% in 2020 and is expected to maintain its lead during the forecast period owing to improving healthcare services and economic growth of developing economies. Moreover, the low cost of conducting clinical trials in this region ultimately encourages manufacturers to shift their manufacturing units, which, in turn, drives the market in APAC.

Asia Pacific is expected to witness significant growth over the forecast period due to the presence of a large number of key companies in the region. These players are focusing on expanding their manufacturing facilities to satisfy the growing need for medical devices and pharmaceuticals. This will ultimately drive the pharmaceutical and medical device segments in the region.

Key Companies & Market Share Insights

Companies are adopting strategies, such as mergers and acquisitions and expansion, to sustain in the highly competitive environment and maintain profitability. For instance, in October 2018, Nordson Corporation acquired Clada Medical Devices, a design and development firm mainly focused on balloon catheters. This enhanced the company’s design and development capabilities, which further supports the company’s position as a prominent contract manufacturer for OEMs across the interventional and surgical device landscape. In addition, in February 2020, Integer Holdings Corporation acquired Inomec, an Israel-based company. The acquisition would provide Integer an R&D and sales center in Israel and would add catheter design, clinical, and pilot manufacturing capabilities to its portfolio.

Moreover, in May 2018, Jabil opened a Nypro healthcare manufacturing facility in Hungary. This initiative would allow Nypro, a Jabil company, to expand its manufacturing capabilities in Europe life sciences and advanced human diagnostics markets. Along with expansion and M&A, companies are adopting partnerships as a key strategic initiative to maintain the market share in the industry. Some prominent players in the global healthcare contract manufacturing market include:

• Sanmina Corporation

• Integer Holdings Corporation

• Jabil Inc.

• Viant Technology LLC

• FLEX LTD.

• Celestica Inc.

• Tecomet Inc.

• Plexus Corp.

• Phillips-Medisize

• Synecco

• Cantel Medical Corp

Healthcare Contract Manufacturing Market Report Scope 

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global healthcare contract manufacturing market report on the basis of type and region:

• Type Outlook (Revenue, USD Billion, 2016 - 2028)

  • Medical Device        

    • By Service

      • Accessories Manufacturing

      • Assembly Manufacturing

      • Component Manufacturing

      • Device Manufacturing

    • By Therapeutic Area

      • Cardiology

      • Diagnostic Imaging

      • Orthopedic

      • IVD

      • Ophthalmic

      • General & Plastic Surgery

      • Drug Delivery

      • Dental

      • Endoscopy

      • Diabetes Care

      • Others

  • Pharmaceutical

    • By Service

      • API/Bulk Drugs

      • Advanced Drug Delivery Formulations

      • Packaging

      • Finished Dose Formulations

        • Solid

        • Liquid

        • Semi-solid Formulations

• Regional Outlook (Revenue, USD Billion, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

    • Russia

    • Belgium

    • Netherlands

    • Switzerland

    • Sweden

  • Asia Pacific

    • Japan

    • China

    • India

    • Australia

    • South Korea

    • Indonesia

    • Malaysia

    • Singapore

    • Thailand

    • Taiwan

  • Latin America

    • Brazil

    • Mexico

    • Argentina

    • Colombia

    • Chile

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE

    • Egypt

    • Israel