Healthcare Contract Manufacturing Market Size, Share & Trends Analysis Report By Type (Medical Devices, Pharmaceutical), By Region (North America, Europe, Asia Pacific, Latin America, MEA), And Segment Forecasts, 2022 - 2030

Report Overview

The global healthcare contract manufacturing market size was valued at USD 211.9 billion in 2021 and is projected to expand at a compound annual growth rate (CAGR) of 9.6% from 2022 to 2030. An increase in offshoring, especially in 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 up the time to market of products. This trend is expected to contribute to the growth of the contract manufacturing market in the foreseeable future. COVID-19 brought in unparalleled demand for diagnostic tests, Personal Protective Equipment (PPE), ventilators, and other critical medical supplies. COVID-19 has had a major impact on the supply-demand gap, with a 1,000 to 2,000-fold increase for PPE products, raw material shortages increased by over 10% thereby pushing the by more than 100% in 2020.

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 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.

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, factors such as the increasing prevalence of noninvasive surgical procedures are driving the demand for pharmaceutical drugs and medical devices. To meet such increased demand, OEMs are outsourcing the manufacturing of non-core manufacturing activities as it assists them in reducing labor costs, freeing up capital, increasing worker productivity, and improving manufacturing lead times. For many large, medium and small pharma firms, outsourcing turns out to be an economic option, as fixed costs for manufacturing biologics products 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. 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, & 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 CMOs may pose a major challenge restraining the market growth.

Type Insights

Based on type the industry is segmented into pharmaceutical and medical devices, wherein the pharmaceutical segment accounted for the largest revenue share of 74.8% in 2021. The medical device segment is further divided on the basis of type and therapeutic area. The type 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 the lack of in-house manufacturing facilities and complexity. On the basis of therapeutic areas, the medical devices segment is analyzed for cardiology, medical imaging, orthopedic, IVD, ophthalmic, general & plastic surgery, drug delivery, dental and other areas.

The cardiology segment held the largest share in 2021. The rising demand for cardiovascular devices as a result of increasing cases of associated conditions is attributed 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 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 2021 and are expected to witness significant growth during the forecast period. Several companies are opting for the outsourcing of drug development due to limited capacity, insufficient resources, lack of skilled professionals, as well as for 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) region accounted for the largest revenue share of 45.7% in 2021 and is expected to remain dominant during the forecast period owing to improving healthcare services and the 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 growth in APAC.

Asia Pacific is also expected to witness significant growth over the forecasted 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 needs for medical devices & pharmaceuticals. This will ultimately drive the pharmaceutical and medical devices segment in the region.

Key Companies & Market Share Insights

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

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

• Nordson Medical

• Integer Holdings Corporation

• Jabil Inc.

• Viant Technology LLC

• FLEX LTD.

• Celestica Inc.

• Celestica Inc.

• Sanmina Corporation

• Plexus Corp.

• Phillips-Medisize

• West Pharmaceutical Services, Inc.

• Synecco

• Catalent, Inc.

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 in each of the sub-segments from 2017 to 2030. For 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, 2017 - 2030)

  • 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

    • API/Bulk Drugs

    • Advanced drug delivery formulations

    • Packaging

    • Finished dose formulations

      • Solid

      • Liquid

      • Semi-solid formulations

• Regional Outlook (Revenue, USD Billion, 2017 - 2030)

  • 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