Small Molecule Innovator API CDMO Market Size, Share & Trends Analysis Report By Stage Type (Preclinical, Clinical, Commercial), By Customer Type, By Therapeutic Area, By Region, And Segment Forecasts, 2024 - 2030

Market Size & Trends

The global small molecule innovator API CDMO market size was estimated at USD 29.94 billion in 2023 and is expected to grow at a CAGR of 6.53% from 2024 to 2030. Growth in the market can be attributed to the increasing demand for small-molecule drugs, rising outsourcing by pharmaceutical companies, and a growing number of clinical trials. In addition, rising pharmaceutical R&D investment to expand the development of new small molecule innovator active pharmaceutical ingredients (APIs), increasing demand for novel therapies, and growing prevalence of cancer & age-related disorders are among the key factors driving market growth. Small molecules continue to play an important role in developing new treatments globally. In 2023, the U.S. FDA approved 55 novel drugs, marking a surge of approximately 50% over the 37 approvals in the previous year.

It was the second-highest count observed over the past three decades. Of the 55 newly endorsed drugs, 34 were categorized as small molecules, constituting 62% of the total. This surge in small molecule approvals is consistent with previous years; they accounted for 56% in 2021 (28 out of 50) and 57% in 2022 (21 out of 37). Moreover, the trend of outsourcing activities in the pharmaceutical domain is rising as companies find value in acquiring additional competencies essential for successful drug development and commercialization. Apart from providing extended expertise and assisting in improved cash flow management, outsourcing brings significant manufacturing advantages, including reducing investment risks. In the context of early-stage technologies and products, establishing expensive in-house capabilities entails substantial risks across the product development phases. At the same time, outsourcing serves as a risk-averse alternative.

A limited understanding of the required scale for current and future product offerings or market penetration poses significant hurdles in designing and scaling manufacturing for in-house production. Consequently, the preference for outsourcing has grown as an effective strategy until market demand for products becomes well-established and understood. Furthermore, enhanced efficiency serves as another pivotal driver for pharmaceutical outsourcing. With mounting pressure on pharmaceutical companies to expedite the introduction of new drugs to the market, outsourcing emerges as a solution to accelerate the drug development process. Leveraging their expertise, experience, and cutting-edge equipment, CDMOs facilitate the swift & efficient production of high-quality drugs, enabling pharmaceutical firms to adhere to their development schedules. Key initiatives by industry participants are also expected to boost market growth.

For instance, in March 2023, Catalent, Inc. collaborated with Grünenthal for an orally dosed small molecule in Grünenthal’s pipeline. This collaboration broadened the company’s operational capabilities in the market. Likewise, the global distribution of clinical trials is expected to boost market growth in the coming years. Clinical trials are executed globally, and their geographical distribution is shaped by diverse factors, such as disease prevalence, regulatory conditions, population demographics, healthcare infrastructure, and cost considerations. As of February 2024, there is a discernible trend toward a more globalized approach to clinical trials. Over half of all registered studies are conducted outside the U.S. Meanwhile, over 35% of trials are exclusively conducted within the U.S. This emphasizes the increasing international collaboration in the collective pursuit of medical advancement.

Market Concentration & Characteristics

The market growth stage is stable and is expected to accelerate over the estimated period. The small molecule innovator API CDMO market is characterized by technologies, regulatory considerations, and globalization & outsourcing of product processes to influence advantages and specialized capabilities.

The small molecule innovator API products are continuously evolving to meet the industry’s demands for efficiency and regulatory compliance. Several advancements have shaped the market, enhancing drug development, manufacturing processes, and productivity

Compliance with stringent regulatory requirements, particularly in the pharmaceutical industry, is a critical component. CDMOs in this market are emphasizing robust quality assurance practices and adherence to regulatory standards thereby witnessing lucrative growth opportunities

Market players leverage strategies, such as collaborations, partnerships, and acquisitions, to promote the reach of their offerings and increase their product capabilities globally. For instance, in October 2023, Cambrex Corp. concluded a USD 38 million-capacity expansion of its small molecule API manufacturing facility in North Carolina. This enhancement resulted in a twofold increase in the facility’s manufacturing capacity. The expansion included innovative analytical & chemical development laboratories, two additional clinical manufacturing suites, and the establishment of a small-scale commercial manufacturing operation featuring three work centers and 2,000 L reactors

Increasing R&D activities, rising number of mergers & acquisitions, and growing disease burden can influence market dynamics positively

A strongpresence of several established players, a rising number of ongoing clinical studies, technologically advanced formulation development, and demand for small molecule innovator API products fuel market growth

Stage Type Insights

The clinical segment accounted for the largest share of 54.68% in 2023. The clinical segment is further sub-segmented into Phase I, Phase II, and Phase III. The segment growth is driven by improving access to medicine, a robust small molecule development pipeline, and the launch of new drugs. Moreover, these clinical small molecule innovator API CDMOs provide support, expertise, and services for appropriate drug formulation, clinical trials (phase I-IV), scale-up, validation & large-scale commercial manufacturing, among others. Clinical CDMOs ensure that appropriate drug products are developed & tested for clinical trials, offer expertise, and save time for APIs at the clinical stage, fueling the market demand.

In the clinical segment, phase III trials dominated the market in 2023. These trials are conducted to confirm a new drug's efficacy and assess its safety in a larger population and are essential for its registration & postmarketing commitments. Phase III trials are conducted in two parts. The first part includes a pivotal study designed & executed to get significant evidence of efficacy, safety, and postmarketing commitments. The second part includes studies to support claims & publications or prepare for drug launch, which are not intended for regulatory submissions.

In 2023, the preclinical segment is anticipated to grow at a lucrative CAGR from 2024 to 2030. Small molecule drugs are designed to enhance and mimic the behavior of natural substances or products within the body. These molecules have simple structures and are customizable to meet specific therapeutic goals. During the early clinical development phase, raw materials, intermediates, and API specifications are used with appropriate testing methods. As the preclinical stage progresses, these test methods/details are studied, and tolerance may be improved with gained knowledge.

Customer Type Insights

The pharmaceutical segment dominated the market in 2023 and accounted for a revenue share of 90.95%. Small-molecule drugs have been the backbone of the pharmaceutical industry for nearly a century. In addition, several pharmaceutical companies are shifting their focus on CDMOs to develop novel small molecule innovator API drugs for the treatment of various indications in areas, such as oncology, immunology, and infectious diseases. This has enabled medical breakthroughs and helped address unmet medical needs, saving several lives using the small molecule innovator API.

Moreover, in recent years, constant advancements in small molecule API innovations have created new possibilities for innovative approaches to develop potential therapies. The growth of the biotechnology segment can be attributed to the rising demand for biotechnology and enhanced molecular efficiency. Furthermore, high investments in the biotechnology industry and constant improvements in molecular biology have resulted in the advent of new scientific disciplines, such as metabolomics, proteomics, and genomics.

Therapeutic Area Insights

The oncology segment dominated in 2023 and is expected to grow at the fastest CAGR of 6.82% from 2024 to 2030 due to the increasing number of cancer cases worldwide. For instance, the Cancer Atlas predicts that there will be 29 million cancer cases globally by 2040. Recent trends in pharmaceutical products have shifted with growing R&D for cancer treatments. The pharmaceutical sector has witnessed significant growth due to rising demand for oncology drugs & therapies fueled by innovative-targeted treatments and personalized medicine approaches, which has led to a rise in demand for the small molecule innovator API CDMOs.

For instance, in January 2022, Sanofi and Exscientia mentioned a research collaboration and license agreement for the development of up to 15 novel small molecule candidates across immunology & oncology, leveraging the AI-driven platform of Exscientia using actual patient samples. The infectious diseases segment witnessed dynamic trends and scenarios across various disease segments. The infectious diseases small molecule innovator API CDMO market, which deals with infectious diseases caused by bacterial and viral pathogens, has witnessed dynamic trends and scenarios across various disease segments.

Such diseases are a major cause of death worldwide and establish an ever-growing medical need. The growing prevalence of severe diseases caused by harmful bacteria, fungi, viruses, and parasites, such as Severe Acute Respiratory Syndrome (SARS), has resulted in growth of the infectious diseases market and need for new drugs. Small molecule innovator API CDMO focuses on the discovery and research & development of new drugs and therapies. Moreover, several molecular entities targeting immunization against fatal diseases are under R&D. Hence, the growing prevalence of such diseases creates the need for new drugs, which fuels the growth of the small molecule innovator API CDMO market.

Regional Insights

North America small molecule innovator API CDMO market is expected to grow at a CAGR of 6.10% over the forecast period. This can be attributed to increasing investments by pharmaceutical companies and growing R&D of small molecule drugs. This has led to a surge in demand for contract development and manufacturing services. The presence of several established pharmaceutical, biotechnology, & CDMO entities and an increasing number of clinical trials are key factors expected to contribute to market growth. These regional entities are focused on small molecule innovator API transactions with geographic expansion & capacity deals in novel therapeutics, which mostly include acquiring new capabilities.

U.S. Small Molecule Innovator API CDMO Market Trends

The small molecule innovator API CDMO market in the U.S. held the largest share in 2023. Pharmaceutical companies are increasingly outsourcing their development & manufacturing activities to CDMOs to reduce costs, accelerate time to market, and access specialized expertise. This trend is fueling market growth as CDMOs expand to meet the growing demand for outsourcing services. This expansion involves investments in new facilities, equipment upgrades, and process improvements. Furthermore, a growing number of companies expanding their manufacturing facilities to cater to the rising pharmaceutical demand is likely to propel market growth.

Europe Small Molecule Innovator API CDMO Market Trends

The Europe small molecule Innovator API CDMO market is expected to grow significantly due to the robust pharmaceutical sector with numerous drug discoveries, development, and manufacturing companies. The growing number of pharmaceutical activities is likely to improve the demand for CDMOs. Moreover, the rising trend of outsourcing services to European countries is anticipated to contribute to the increasing demand for small molecule innovator API CDMOs.

The small molecule innovator API CDMO market in Germany held the largest share in 2023, owing to the advancements in therapy and increasing clinical trial activities. In addition, the increasing complexity of products and stringent regulatory norms are some key factors anticipated to propel market growth during the forecast period.

The UK small molecule innovator API CDMO market is anticipated to grow over the forecast period. The UK is considered a lucrative market for pharmaceutical companies due to its extensive R&D initiatives, excellent early innovation medicine platforms, and pharmaceutical clinical trials being undertaken to address the challenges posed by various diseases. Moreover, the presence of various multinational CDMOs in the country is anticipated to contribute to market growth.

Asia Pacific Small Molecule Innovator API CDMO Market Trends

The small molecule innovator API CDMO market in Asia Pacific held the largest share of 41.5% in 2023. In the past decade, the manufacturing of pharmaceutical products has been outsourced to Asian countries, such as India and China. Asia Pacific is expected to witness rapid growth in its pharmaceutical industry due to rising healthcare expenditure, increasing prevalence of chronic diseases, and improving healthcare infrastructure. This is expected to drive the demand for small molecule APIs and CDMO services to support drug development and manufacturing.

The China small molecule innovator API CDMO market held the largest share in 2023 due to the high geriatric population and presence of a large middle-income group. The availability of low-cost labor is one of the major factors for pharmaceutical firms across the globe to outsource API development and manufacturing to China.

The small molecule innovator API CDMO market in Japan is expected to grow over the forecast period due to technological advancements, strong R&D capabilities, the availability of a skilled workforce, strategic location, favorable government initiatives, and regulatory compliance.

The India small molecule innovator API CDMO market is anticipated to grow at the fastest CAGR over the forecast period owing to low labor costs, improvements in healthcare infrastructure, and easy availability of technical expertise.

Key Small Molecule Innovator API CDMO Company Insights

Major players operating in this market focus on adopting inorganic strategic initiatives, such as mergers, partnerships, and acquisitions. The prominent strategies companies adopt are service launches, mergers & acquisitions/joint ventures, partnerships & agreements, and expansions to increase market presence & revenue and gain a competitive edge. Hence, increasing adoption of inorganic strategic initiatives is highly anticipated to boost market share of prominent players.

Recent Developments

• In February 2024, BioVaxys announced the acquisition of IMV portfolio of discovery, preclinical & clinical development-stage from IMV Inc., Immunovaccine Technologies, & IMV USA. These were developed in infectious disease, oncology, antigen desensitization, & other immunological fields based on IMV’s DPX immune educating platform technology

• In August 2023, Catalent, Inc. announced the acquisition of Metrics Contract Services (Metrics), a CDMO from Mayne Pharma Group Limited, for USD 475 million. The acquisition was expected to enhance the company’s oral solid formulation capabilities in development, manufacturing, and packaging, expanding its capacity to handle potent compounds

• In February 2023, Piramal Pharma Solutions announced producing the first few batches of APIs at its Michigan facility in Riverview, U.S.

Small Molecule Innovator API CDMO Market Report Scope

Global Small Molecule Innovator API CDMO Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global small molecule innovator API CDMO market report based on stage type, customer type, therapeutic area, and region:

• Stage Type Outlook (Revenue, USD Million, 2018 - 2030)

  • Preclinical

  • Clinical

    • Phase I

    • Phase II

    • Phase III

  • Commercial

• Customer Type Outlook (Revenue, USD Million, 2018 - 2030)

  • Pharmaceutical

    • Small

    • Medium

    • Large

  • Biotechnology

    • Small

    • Medium

    • Large

• Therapeutic Area Outlook (Revenue, USD Million, 2018 - 2030)

  • Cardiovascular Diseases

  • Oncology

  • Respiratory Disorders

  • Neurology

  • Metabolic Disorders

  • Infectious Diseases

  • Others

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

  • North America

    • U.S.

    • Canada

  • Europe

    • UK

    • Germany

    • France

    • Italy

    • Spain

    • Denmark

    • Sweden

    • Norway

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • South Korea

    • Thailand

    • Taiwan

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa (MEA)

    • South Africa

    • Saudi Arabia

    • UAE

    • Kuwait

    • Israel