The growth of Contract Development Manufacturing Organizations and the manufacturing of APIs has been credited to a rise in the demand for generic drugs, patent expirations, and biological innovations. However, the COVID-19 pandemic has drastically increased the demand for innovations and generic drugs, recently. Although there has been an increased demand for APIs catering to these fields, the supply of API has proved challenging.
The pandemic has resulted in business lockdowns in several parts of the world. China is the first country to face the devastations of the pandemic and as such has extended periods of lockdown. This resulted in over 44 Chinese API manufacturers closing their operations temporarily due to the government-imposed lockdown restrictions. Since China is a leading API manufacturing hub and also the major region, where the raw materials for API manufacturing are found, these non-operational Chinese CDMOs severely affected the supply of API at a global scale.
Various countries and governments worldwide have opted to boycott APIs made in China. However, this also means that they need to either manufacture or source API from other regions. This dichotomy in the decision versus the supply scenario has resulted in two major changes. First, other regions like Singapore, Belgium, and India are focusing more on API manufacturing, thereby aiming to become the API hubs of the future. Also, corporates are focusing on CDMO from multiple regions to serve locally, thereby omitting the chances of supply chain disruptions like the ones caused by the COVID-19 pandemic. They are also looking to operate from countries where CDMO can import from Chinese players.
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The CDMO API manufacturing market features a fragmented competitive landscape and several small players are entering the market. However, several mergers and acquisitions are happening recently. The market is expected to consolidate in future
Suppliers widely prefer approved provider operating models to reduce risks and improve the potential for value creation
Value-based pricing models have become one of the most commonly used pricing strategies recently
Grand View Research has identified the following key cost components for availing CDMO API manufacturing:
Project Planning and Management Costs
Drug Product Analytical Development
Batch Manufacturing CostsSupplier Management
Creation of Batch Records
Raw Material Costs
Machinery and Accessory Cost
Vile Production Costs
Other GMP Batch Production Costs
Batch manufacturing cost is the major cost component of a CDMO API manufacturer, accounting for 65% of the total cost of manufacturing.
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