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.
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.
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.
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
Report Attribute |
Details |
Market size value in 2021 |
USD 192.6 billion |
Revenue forecast in 2028 |
USD 323.6 billion |
Growth Rate |
CAGR of 7.7% from 2021 to 2028 |
Base year for estimation |
2020 |
Historical data |
2016 - 2019 |
Forecast period |
2021 - 2028 |
Quantitative units |
Revenue in USD billion and CAGR from 2021 to 2028 |
Report coverage |
Revenue forecast, company ranking, competitive landscape, growth factors, and trends |
Segments covered |
Type, region |
Regional scope |
North America; Europe; Asia Pacific; Latin America; MEA |
Country scope |
U.S.; Canada; U.K.; Germany; France; Italy; Spain; Russia; Belgium; Netherlands; Switzerland; Sweden; China; India; Japan; Australia; South Korea; Indonesia; Malaysia; Singapore; Thailand; Taiwan; Brazil; Mexico; Argentina; Colombia; Chile; South Africa; Saudi Arabia; UAE; Egypt; Israel |
Key companies profiled |
Nordson Corporation; Integer Holdings Corporation; Jabil Inc.; Viant Technology LLC; FLEX LTD.; Celestica Inc.; Sanmina Corporation; Plexus Corp.; Phillips-Medisize; Synecco; Catalent, Inc. |
Customization scope |
Freereport customization (equivalent up to 8 analysts working days) with purchase. Addition or alteration to country & segment scope. |
Pricing and purchase options |
Avail customized purchase options to meet your exact research needs. Explore purchase options |
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
b. The global healthcare contract manufacturing market size was estimated at USD 177.9 billion in 2020 and is expected to reach USD 192.6 billion in 2021.
b. The global healthcare contract manufacturing market is expected to grow at a compound annual growth rate of 7.7% from 2021 to 2028 to reach USD 323.6 billion by 2028.
b. North America dominated the healthcare contract manufacturing market with a share of 25.5% in 2019. This is attributable to the high demand for cardiovascular devices due to rising cases of heart disorders, a growing need for technical expertise, and increased complexities associated with these devices.
b. Some key players operating in the healthcare contract manufacturing market include Tecomet Inc; Jabil, Inc.; Celestica, Inc.; Integer Holdings Corp.; Plexus Corp.; Sanmina Corp.; West Pharmaceutical Services, Inc.; Flex Ltd.; Cantel Medical Corp.; Viant; Synecco Ltd.; and Angiplast.
b. Key factors are the rising prevalence of chronic disorders, increasing aging population, and increasing outsourcing of devices due to extensive use and complexity in manufacturing.
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With Covid-19 infections rising globally, the apprehension regarding a shortage of essential life-saving devices and other essential medical supplies in order to prevent the spread of this pandemic and provide optimum care to the infected also widens. In addition, till a pharmacological treatment is developed, ventilators act as a vital treatment preference for the COVID-19 patients, who may require critical care. Moreover, there is an urgent need for a rapid acceleration in the manufacturing process for a wide range of test-kits (antibody tests, self-administered, and others). The report will account for Covid19 as a key market contributor.