Healthcare Contract Development And Manufacturing Organization Market Size, Share & Trends Analysis Report By Services (Contract Development, Contract Manufacturing), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global healthcare contract development and manufacturing organization market size was valued at USD 232.7 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 9.5% from 2023 to 2030. An increase in the uptake of outsourcing services by pharmaceutical companies and growth in R&D investments are expected to drive the market. Medical devices & pharmaceutical companies are outsourcing low-end services to reduce the overall cost of production. This trend is expected to contribute to the growth of the market for healthcare Contract Development and Manufacturing Organization (CDMO) in the forecast period. The presence of end-to-end service providers that offer value-added services for an integrated or risk-sharing business model is expected to bolster market growth.

The COVID-19 pandemic has significantly impacted the global economy in 2020 and has had an ongoing impact on various industries. However, healthcare contract development and manufacturing organization (CDMO) market witnessed a positive impact due to this pandemic. The sudden surge in demand for COVID-19 vaccines has increased the number of outsourced manufacturing agreements for CDMOs, thus supporting market growth.

The year 2022 was challenging for international business, reflecting escalating geopolitical tensions, tighter monetary policy, high inflation, and looming recessions. The global supply chain witnessed significant risks of bifurcation in 2022 as the Ukraine-Russia conflict became a new geopolitical fault line and China-U.S. tensions remained high.

The ongoing Ukraine-Russia war has had security and geopolitical reverberations across the mentioned countries and beyond. The commercial and economic fallout has been no less far-reaching.  With the increasing disruptions across trade and commerce, people’s movements, financial exchanges, inflation, and food shortages, the global economy is witnessing a decline just when it was trying to recover from the pandemic-driven slump. Pharmaceutical manufacturers witnessed the effects of high inflation and decreasing FDA drug approvals in 2022 and 2023. Pharmaceutical and biopharmaceutical companies tend to outsource the manufacturing process of new molecular entities (NME). However, a considerable decline in the rate of NME approvals was witnessed in 2022. This also implies that the decline in NME approvals shall directly decrease the commercial-scale production agreements 2023 for larger contact developers and manufacturers.

According to the 2022 PhRMA member annual survey, pharmaceutical companies invested USD 102.3 billion in R&D. As the healthcare industry is undergoing a process of dynamic change, factors such as rapid technological advancements (e.g., automation & artificial intelligence), the need for CROs/CMOs/CDMOs, and rising investments in research are influencing the healthcare market. Outsourcing activities are befitting many pharmaceutical companies in improving operational efficiencies, expanding geographical presence, decreasing resource costs, gaining therapeutic expertise, and enhancing on-demand services. Medical device companies are focusing on emerging countries to gain access to newer markets and increase their revenues. OEM consolidation has also boosted the overall medical devices contract manufacturing market.

For pharmaceutical companies, increasing R&D costs is a challenge that significantly affects their bottom line. Hence, they have partnered with CROs & CMOs for integrated outsourcing services. Outsourcing research activities to CMO or CDMO helps accelerate the workflow of companies, provide unique specialized services, decrease drug development costs, and provide the expertise & experience needed for assisting research.

Services Insights

The contract manufacturing segment dominated the market for healthcare contract development and manufacturing organization, and accounted for the largest revenue share of 73.5% in 2022. This is majorly due to the high penetration of the contract manufacturing segment in the pharmaceutical and medical devices industry. Based on services, the market for healthcare CDMO is divided into contract development and contract manufacturing segments. Contract manufacturing is further classified into active pharmaceutical ingredients (API) drugs, finished dose formulations, and medical devices. Access to advanced manufacturing technologies, cost-effectiveness, and the increasing number of CMOs are some major factors positively affecting the medical device segment’s growth.

The contract manufacturing segment is poised to hold the lion’s share during the analysis period owing to several key inorganic strategic initiatives undertaken by the major players to augment their market share across the healthcare contract manufacturing industry. A few of the key initiatives by major players include pharmaceutical capacity expansion, geographic expansions, investment funding, strategic partnerships/acquisitions, etc.

• For instance, in June 2022, Jubilant Pharma Limited, a leading Canada-based pharmaceutical CMO, announced that the Government of Quebec has granted them a loan of USD 18 million to fund the capacity expansion of the contract manufacturing facility in Montreal.

• In February 2021, Cascade Chemistry, a pharmaceuticals-based CDMO announced the expansion of a USD 14 million new facility in Eugene, Oregon. The facility is designed to increase the company’s capacity to manufacture APIs under current Good Manufacturing Practices standards and procedures. 

  

The contract development segment, on the other hand, is poised to witness a considerable CAGR of 9.3% during the analysis timeframe. Worldwide pharmaceutical and biotech companies are increasingly outsourcing drug development activities to CROs as a strategy to stay competitive and flexible in a world of increasingly sophisticated technologies, exponentially growing knowledge, and an unstable economic environment. Contract development offers several benefits over in-house development of drugs, such as access to industry experts, less time to market, cost-effectiveness, and more focus on core competencies. The increasing focus of researchers on the development of novel therapeutics, growing research & development activities across rare diseases, increase in the rate of public and private research funding, and growing mergers and acquisitions among major players are a few of the crucial factors shaping up the healthcare contract development industry.

• For instance, In September 2022, Avance Clinical, a biotech-based CRO in Australia, announced that it had expanded its services into the North American region by acquiring C3 Research Associates, a CRO partner company in the U.S.

• In July 2021, Parexel International Corporation announced a definitive merger agreement with EQT and Goldman Sachs from Pamplona Capital Management for USD 8.5 billion.

• In February 2021, ICON plc announced a definitive agreement to acquire PRA Health Sciences, Inc. for USD 12 billion. This acquisition proved mutually beneficial as both companies now have a robust customer base and an extended geographic reach.

Hence, the aforementioned factors and the latest trends prevailing across the outsourcing industry have significantly augmented the contract development industry, thereby propelling the growth of the overall healthcare CDMO market.

Regional Insights

North America dominated the healthcare contract development and manufacturing organization market and held the highest revenue share of 40.9% in 2022. North America is one of the major contributors to the growth of healthcare CDMO market. The presence of several established biotechnology, pharmaceutical, and medical device companies characterize it. Rapid growth in medical device manufacturing to meet the high demand for efficient healthcare in the region is expected to be one of the major factors contributing to market growth in North America. The development of cost-effective medical device equipment is likely to have a positive impact on the market during the forecast period. Moreover, medical device manufacturers focus on North America due to its booming healthcare industry.

Asia Pacific is expected to witness the fastest CAGR of 10.4% in the forecast period. High growth of the region is due to the growth in opportunities, especially in Japan, China, and India. Factors such as improved regulatory framework, high scope for cost savings, increased complexity in product designs, and growing number of medical device companies in the region are expected to drive the Asia Pacific market. Furthermore, availability of skilled workforce in the region at a lower cost than the U.S. is anticipated to propel the market. China holds the largest share in the Asia Pacific market, primarily due to high healthcare expenditure and rapid introduction of advanced medical devices. Increasing regulatory focus on quality control for manufacturing is one of the key factors expected to drive its market over the forecast period.  

Key Companies & Market Share Insights

The healthcare CDMO market was comparatively consolidated in nature with few major players holding the lion’s share across the industry. However, the market is witnessing a shift towards fragmentation as several small to medium sized companies have been penetrating the industry in the past few years. The key parameter affecting the competitive nature is the rapid adoption of advanced healthcare technology for improved healthcare. Also, to retain market share and diversify the product portfolio, major players are undertaking strategies such as mergers, acquisitions, and partnerships. For instance, in March 2023, PCI Pharma Services announced its plans to invest USD 50 million in capacity expansion of its sterile injectables site at Rockford, Illinois. The project is expected to add a new 200,000-square-foot manufacturing facility to enhance the plant’s injectable drug and device manufacturing capacity. Some of the prominent players in the global healthcare contract development and manufacturing organization market include:

• Catalent Inc.

• Lonza

• Recipharm AB

• Siegfried Holding AG

• Thermo Fisher Scientific, Inc.

• Labcorp Drug Development

• Jabil Inc

• Syngene International Limited

• IQVIA Inc.

• Almac Group

• Ajinomoto Bio-Pharma

• Adare Pharma Solutions

• Alcami Corporation

• Vetter Pharma International

Healthcare Contract Development And Manufacturing Organization Market Report Scope

Global Healthcare Contract Development And Manufacturing Organization Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For the purpose of this study, Grand View Research has segmented the global healthcare contract development and manufacturing organization market report on the basis of services, and region:

• Services Outlook (Revenue, USD Billion, 2018 - 2030)

  • Contract Development

    • Small Molecule

      • Preclinical

        • Bioanalysis and DMPK Studies

        • Toxicology Testing

        • Other Preclinical Services

      • Clinical

        • Phase I

        • Phase II

        • Phase III

        • Phase IV

      • Laboratory Services

        • Bioanalytical Services

        • Analytical Services

    • Large Molecule

      • Cell Line development

      • Process Development

        • Upstream

          • Microbial

          • Mammalian

          • Others

        • Downstream

          • MABs

          • Recombinant Proteins

          • Others

      • Others

  • Contract Manufacturing

    • Small Molecule

    • Large Molecule

      • MABs

      • Recombinant Proteins

      • Others

    • High Potency API

    • Finished Dose Formulations

      • Solid Dose Formulation

      • Liquid Dose Formulation

      • Injectable Dose Formulation

    • Medical Devices

      • Class I

      • Class II

      • Class III

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • UK

    • France

    • Italy

    • Spain

    • Netherlands

    • Belgium

    • Denmark

    • Norway

    • Sweden

  • Asia Pacific

    • China

    • India

    • Japan

    • Australia

    • South Korea

    • Malaysia

    • New Zealand

    • Singapore

    • Philippines

    • Thailand

  • Latin America

    • Brazil

    • Mexico

    • Argentina

    • Colombia

    • Chile

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE

    • Israel

    • Kuwait