Topical Drugs CDMO Market Size, Share & Trends Analysis Report By Product Type (Semi-solid Formulations, Liquid Formulations Drugs), By Service Type (Contract Development, Contract Manufacturing), By End-use, By Region, And Segment Forecasts, 2024 - 2030

Topical Drugs CDMO Market Size & Trends

The global topical drugs CDMO market size was estimated at USD 41.54 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 11.4% from 2024 to 2030.  Growth in the aesthetic and cosmetic industry has significantly driven demand for topical drugs, thereby simultaneously boosting demand for contract development and manufacturing services. Products such as skin-lightening agents, topical anti-aging creams, and scar reduction treatments are gaining popularity. Moreover, topical drugs are being developed for a wider range of indications including pain management, systemic conditions, and wound healing, further increasing their market adoption. The pharmaceutical industry has made substantial innovations in the formulation of topical medications. These advancements have led to better-tolerated and more effective topical treatments, expanding the range of conditions they can address. This has led to an increased need for outsourced development and manufacturing services.

Furthermore, increasing investment by major CDMOs across the topical drugs industry is another significant factor supporting the growth of the market. Several recently announced investments or expansions include:

• In October 2022, Cambrex, invested USD 50 million with an aim to expand its research and development facility spanning 21,000 square feet in Minnesota, U.S. This strategic initiative enhanced its capabilities in small molecule development and manufacturing services including topical formulation drugs.

• In January 2022, Recro Pharma, Inc. secured a contract for cGMP manufacturing and formulation development of a topical dermal treatment to prevent skin cancer.

• In June 2021, MedPharm Ltd, inaugurated a new facility in Raleigh-Durham, North Carolina. This expansion broadens its CDMO services in transdermal and topical drug delivery.

The outbreak of the COVID-19 pandemic had a negative impact on the market. The COVID-19 pandemic significantly impacted various pharmaceutical industry sectors, including the production and supply chain of topical drugs. Keyways in which the pandemic affected the topical drugs industry include:

• Supply Chain Disruptions: The pandemic significantly disrupted the global supply chains, affecting the accessibility of manufacturing capabilities and raw materials. Travel restrictions, lockdowns, and other measures applied to limit the spread of the virus disrupted the distribution and production of pharmaceuticals, including topical medications. This led to shortages and delays in the supply of the same.

• Clinical Trial Disruptions: Several clinical studies, including those for topical medicine, were temporarily delayed or put on hold owing to safety concerns. This disturbed the testing and development of new topical drug treatments and formulations.

• Decreased Demand for Elective Appointments: Appointments for dermatological elective conditions, such as topical skin disease management and acne treatments, were often canceled or postponed during the initial phase of the pandemic. Healthcare facilities and patients focused on COVID-19-related and urgent care, leading to declining demand for certain topical medications.

• Shift in Research Focus: Several pharmaceutical and biopharmaceutical companies shifted their R&D efforts toward COVID-19-related vaccines and treatments, distracting attention and resources away from non-COVID-19-related products, including topical drugs.

However, the topical drugs CDMO industry regained its revenue shares post the initial phase of the COVID-19 pandemic by adopting measures such as collaboration with pharmaceutical companies and investing in in-organic strategies such as acquisitions and mergers with niche topical drug providers, which helped them broaden its service offerings. Furthermore, the COVID-19 pandemic helped implement virtual practices, which made regulatory agencies shift to remote platforms. Virtual audits and meetings became standard practice, enabling the continuation of projects and reducing disruptions.

Product Type Insights

The liquid formulations segment is anticipated to witness a considerable CAGR of 11.5% over the forecast period. Due to their advantages, liquid formulations, such as suspensions and solutions, are growing in the pharmaceutical pipeline. These formulations offer a non-invasive and convenient way to deliver medicines through the skin, making them appropriate for numerous therapeutic indications. In addition, improved formulation strategies, innovative drug delivery technologies, and interest in personalized medicine have spurred R&D investments in this sector, resulting in an expanding pipeline of liquid formulation topical drugs to treat patients with diverse medical conditions.Hence, an increase in the pipeline of liquid formulation topical drugs by pharmaceutical players significantly boosts demand for topical drugs CDMO services to curb the cost of development by these sponsors and simultaneously augment segmental growth

The semi-solid formulations segment held the largest revenue share of 66.2% in 2023. The high shares of this segment are attributed to the increasing approval of semi-solid topical drugs in the past few years. The subsequent rise in U.S. Food and Drug Administration (FDA) approval of semi-solid topical formulations such as creams, ointments, and gels has considerably boosted the demand for topical drugs outsourced services. For instance, below is a table indicating examples of various semi-solid topical products from 2016 to 2022:

Service Type Insights

The contract manufacturing segment dominated the market with the largest revenue share of 63.9% in 2023. High shares of the segment are majorly due to the increase in the number of CDMOs penetrating the topical drugs CDMO industry. Moreover, contract manufacturing organizations often possess specialized expertise and knowledge in topical drug production and formulation, ensuring compliant and high-quality manufacturing processes. Outsourcing manufacturing to CMOs can be cost-effective for pharmaceutical companies. CMOs can often achieve economies of scale, reducing the cost of production. Hence, the aforementioned factors are anticipated to support the lion’s share of the segment.

The contract development segment, on the other hand, is anticipated to witness a lucrative CAGR of 12.2% over the forecast period. The segment's high growth is due to the increasing number of topical drugs requiring innovative expertise and technology for development. Contract development organizations often have this specialized knowledge, making them a preferred choice for drug development. In addition, the increasing research and development investment in topical drugs is another considerable factor augmenting segmental growth. For instance, on 24 October 2023, DermBiont, a clinical-stage biotechnology company, announced a Series B financing of USD 35.2 million to support the research and development of two topical drugs, SM-020 and SM-030, aimed at addressing seborrheic keratoses (SKs) and melasma.

End-use Insights

The pharmaceutical companies segment dominated the market with the largest revenue share of 40.8% in 2023. This is attributable to the growing number of pharmaceutical companies ramping up their investments in innovative topical drugs. Moreover, there has been a significant growth in the rate of regulatory approvals for several topical products by pharmaceutical companies, thus boosting demand for outsourced services. For instance, in July 2022, Incyte, a pharmaceutical company, announced U.S. FDA approval of its topical cream opzelura (Ruxolitinib) for the treatment of vitiligo.

On the other hand, the biopharmaceutical companies’ segment is anticipated to witness a lucrative CAGR of 11.6% over the forecast timeframe. High growth is primarily due to the growing number of biopharmaceutical companies investing in developing and producing topical drugs for various medical conditions. These investments are driven by several factors, including the potential for reduced systemic side effects, targeted drug delivery, and the increasing demand for non-invasive treatment options.  The continued investment in topical formulations emphasizes their importance in the pharmaceutical industry and the growing demand for effective, patient-friendly topical treatment options.

Regional Insights

Asia Pacific held the largest revenue share of 31.5% in 2023, followed by North America. The dominance of this region is majorly due to cost efficiency. Several countries in the Asia Pacific region, such as China and India, offer cost-effective manufacturing solutions. Lower operational and labor costs make it attractive for pharmaceutical companies to outsource topical drug production to CDMOs in the region, resulting in significant cost savings. Furthermore, several Asian countries are home to a rapidly expanding pharmaceutical drugs industry, with rising demand for innovative medications and increasing healthcare needs. This growth has driven pharmaceutical companies to look for reliable regional CDMO partners. Hence, the aforementioned factors are anticipated to support the lucrative growth of the region.

Latin America, on the other hand, is anticipated to register a stable CAGR of 11.8% during the forecast period. Economic development in Latin America has increased disposable income, allowing more people to afford specialized cosmetic dermatological products and topical medications. Brazil is known for its robust beauty and cosmetic industry. The country is witnessing significant demand for topical products, including those for cosmetic and therapeutic purposes. Hence, such growth in demand is anticipated to boost regional growth.

Key Companies & Market Share Insights

The major players operating across the topical drugs CDMO industry are focused on adopting in-organic strategic initiatives such as mergers, partnerships, acquisitions, etc. Moreover, companies focus on geographic expansion strategies to augment their market position. For instance, in May 2023, Contract Pharmaceuticals Limited, one of the prominent CDMOs specializing in producing topical and non-sterile liquid pharmaceuticals, recently completed successful inspections of its Mississauga facilities by the Health Canada and Brazilian Regulatory Authority (ANVISA). This shall allow the company to market its products in several geographies.

Topical Drugs CDMO Market Report Scope

Global Topical Drugs CDMO Market Report Segmentation

This report forecasts revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global topical drugs CDMO market report based on product type, service type, end-use, and region:

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

  • Semi-solid Formulations

  • Creams

  • Ointments

  • Gel

  • Others

  • Liquid Formulations Drugs

  • Solid Formulations

  • Transdermal Products

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

  • Contract Development

  • Contract Manufacturing

• End-use Outlook (Revenue, USD Million, 2018 - 2030)

  • Pharmaceutical Companies

  • Biopharmaceutical Companies

  • Others

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

  • North America

    • U.S.

    • Canada

  • Europe

    • UK

    • Germany

    • France

    • Italy

    • Spain

    • Denmark

    • Sweden

    • Norway

  • Asia Pacific

    • Japan

    • China

    • India

    • Australia

    • South Korea

    • Thailand

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE

    • Kuwait