Contract Manufacturing Organizations (CMO) Market Size, Share & Industry Analysis, By Service (API Manufacturing, Finished Product {Solid Dosage Forms, Injectables, and Others}, and Packaging), and Regional Forecast, 2024-2032

The global Contract Manufacturing Organizations (CMO) market size was valued at USD 145.32 billion in 2023. The market is projected to grow from USD 156.29 billion in 2024 to USD 289.68 billion by 2032, exhibiting a CAGR of 8% during the forecast period.

A Contract Manufacturing Organization (CMO) is a specialized company that provides comprehensive manufacturing services to the pharmaceutical and biotechnology industries. CMOs assist companies in the pharmaceutical industry by handling the production of a drug substance, allowing them to outsource manufacturing processes that they may not have the manufacturing capacities or resources for managing in-house. This includes services, such as formulation development, stability studies, and commercial production, all the while ensuring compliance with the regulatory standards, such as the Good Manufacturing Practices (GMP) mandated by the regulatory bodies, such as the U.S. FDA.

Contract Manufacturing Organizations (CMO) play a crucial role in the pharmaceutical supply chain, enabling companies to scale operations efficiently and focus on their core activities, which include drug discovery and marketing. By partnering with the CMOs, pharmaceutical firms can reduce costs, accelerate time-to-market, and access specialized expertise, which is becoming increasingly vital in a competitive global market.

The market’s growth can be attributed to advancements in biopharmaceutical manufacturing technologies and growing focus on personalized medicine and gene therapies, which are creating new opportunities for the Contract Manufacturing Organizations (CMO). Moreover, the increasing demand for generic pharmaceuticals is prompting several healthcare companies to outsource manufacturing activities to CMOs, enhancing efficiency and reducing costs. This is anticipated to fuel the market growth in the coming years.

The global market witnessed positive growth during the COVID-19 pandemic. This growth is credited to an increase in the number of COVID-19 cases, which fueled the demand for several drugs and increased the need for large-scale manufacturing. To fulfill these needs, several pharmaceutical and biotechnology companies partnered with the Contract Manufacturing Organization (CMO), which contributed to the market growth.

• For instance, in June 2020, Moderna, Inc. entered a partnership with Catalent, Inc. for the large-scale, commercial fill-finish manufacturing of Moderna's mRNA-based COVID-19 vaccine candidate (mRNA-1273). The production was carried out at the Bloomington biologics facility in Indiana, U.S.

After the COVID-19 pandemic, the market is set to expand at a normal growth rate due to the reduction in the demand for COVID-19-related products, changes in capacity expansion plans, and increased focus on non-COVID-19 therapeutics.

Contract Manufacturing Organizations (CMO) Market Trends

Adoption of Digitization and Automation in CMOs to Improve Production Capabilities

In terms of current market trends, the Contract Manufacturing Organizations (CMOs) are increasingly integrating digital technologies and automation to improve their production capabilities and meet the rising global demand for several drugs.

• For instance, in May 2024, Samsung Biologics, a CMO, completed the digital connectivity phase, which allowed it to offer advanced AI-driven services to its biopharma partners. This technological adoption is boosting their efficiency, providing a competitive edge, and lowering their costs and risks.

The implementation of digitization and automation is enabling CMOs to optimize their manufacturing workflows, minimize manual errors, and improve Overall Equipment Effectiveness (OEE). This is leading to greater efficiency, higher production rates, and reduced expenses. Furthermore, these digitized, automated systems are helping CMOs maintain stringent quality standards and comply with the Good Manufacturing Practices (GMP) essential in the pharmaceutical sector. In addition, the shift toward digitalized aseptic production is offering several benefits over the conventional aseptic manufacturing processes, positively impacting the entire production process.

• For instance, an article published by the International Society of Pharmaceutical Engineering (ISPE) in March 2023 highlighted that the digitalized aseptic production model incorporates advanced features, such as paperless production, 100% traceability, and rapid identification and correction of quality issues.

Contract Manufacturing Organizations (CMO) Market Growth Factors

Rising Outsourcing of Biologics and Biosimilars Manufacturing to Boost Market Growth

Over the past few years, the global burden of chronic diseases, including various cancers, diabetes, and neurological disorders, has been rising significantly, increasing the demand for biologics and biosimilars. Such a scenario is encouraging CMOs to enter the market with their specialized drug manufacturing services.

• For instance, according to the data published by the American Cancer Society (ACS) in January 2023, 1,958,310 new cancer cases were projected to be diagnosed in the U.S. in 2023.

Biologics are complex molecules that require specialized manufacturing skills and facilities, prompting a number of pharmaceutical companies to partner with contract manufacturing organizations (CMOs) for their production.

• For instance, in April 2024, AGC Biologics collaborated with Var2 Pharmaceuticals ApS to produce cancer-specific therapeutic antibody fragments, covering various aspects - from method implementation to regulatory support.

Moreover, biosimilars, which require a less expensive manufacturing process than biologics, offer comparable safety and efficacy for chronic diseases. This has led to an increased outsourcing of biosimilars by pharmaceutical companies, thereby driving the expansion of CMOs.

• In November 2023, SwiftPharma BV and PlantForm entered a contract manufacturing agreement to produce antibodies and proteins for PlantForm's pipeline, including a biosimilar of pembrolizumab.

These strategic partnerships and advancements in manufacturing capabilities are expected to significantly drive the demand for biologics and biosimilars in the coming years.

Increased Investment in Expanding Drug Manufacturing Capabilities of CMOs to Drive Market Growth

Increasing demand for pharmaceutical products due to the rise of chronic diseases is prompting CMOs to expand their drug production capacity. As pharmaceutical companies concentrate on core research and development activities, they are increasingly outsourcing the manufacturing of their drugs to CMOs that offer specialized expertise and advanced technologies.

• For instance, in March 2024, Tonix Pharmaceuticals selected two CMOs for the launch of Tonmya (cyclobenzaprine), a treatment for fibromyalgia.


• Similarly, Ferring and SK Pharmteco Inc. entered a commercial agreement in April 2024 to enhance the manufacturing capacity for Ferring's gene therapy, Adstiladrin. These partnerships are crucial for ensuring a stable supply of medications, which is expected to boost the demand for contract manufacturing services, driving the market growth in the coming years.

Furthermore, to meet this growing demand, CMOs are investing significantly in their facilities and upgrading their capabilities by constructing new manufacturing sites, implementing continuous manufacturing processes, and adopting advanced analytical techniques. These measures will help them improve their efficiency and quality of service.

• For instance, Catalent, Inc. announced a USD 350 million investment in April 2022 to expand its biologics manufacturing capabilities in Indiana, U.S.

Such production expansions are expected to enable CMOs to provide integrated solutions that streamline the drug development process, ultimately driving the market growth in the coming years.

RESTRAINING FACTORS

High Costs Associated With Establishing Production Facilities May Hinder Market Expansion

Despite the growing demand for pharmaceutical outsourcing, several factors are limiting the entry of new Contract Manufacturing Organizations (CMOs) in the global market, which may restrict the market growth.

Establishing a new manufacturing facility is a complex, costly, and time-consuming process as it includes designing of manufacturing processes, scaling up of production, building the supply chain, complying with regulations, and constructing the physical facility. Even expanding an existing facility or transferring a single product to a new site can take several years.

• For instance, in April 2023, the Pharmaceutical Research and Manufacturers of America (PhRMA) stated that building just one production facility can cost up to USD 2 billion. Furthermore, they also stated that the completion of this facility can take 5-10 years before it is even operational. Such high investments are creating barriers to entry for companies looking to establish their in-house manufacturing capabilities and provide production services to others.

Additionally, pharmaceutical companies may be hesitant to rely on Contract Manufacturing Organizations (CMOs) for critical operations, such as drug manufacturing as they prioritize product quality and security. These high barriers to entry, coupled with the substantial costs of setting up production facilities, are expected to limit market expansion in the coming years.

Contract Manufacturing Organizations (CMO) Market Segmentation Analysis

By Service Analysis

Outsourcing of API Manufacturing to CMOs Boosted Segment’s Dominance in 2023

Based on service, the market is segmented into API manufacturing, finished product, and packaging. The finished product segment is further sub-segmented into solid dosage forms, injectables, and others.

The API manufacturing segment accounted for the maximum global Contract Manufacturing Organizations (CMO) market share in 2023. This growth can be attributed to the increasing focus of global pharmaceutical companies on outsourcing the production of their API to specialized Contract Manufacturing Organizations (CMO). This initiative can offer several other benefits and provide cost-effective solutions, especially in emerging countries. Moreover, the rising pharmaceutical exports of API worldwide are expected to increase the manufacturing demand, representing several opportunities for CMOs and driving the segment growth.

• For instance, in April 2024, the API Innovation Center announced its plans to collaborate with Apertus Pharmaceuticals, LLC for the expansion of its manufacturing capacity in Missouri, U.S. Such initiatives by the key players are anticipated to boost the segment’s growth during the forecast period.

The finished product segment held the second-largest market share in 2023. The segment’s growth can be attributed to the rising preference of pharmaceutical companies for getting their finished products manufactured from Contract Manufacturing Organizations (CMO). This will help them increase their product availability across the globe and focus on other research activities for their therapeutics. Moreover, the high burden of diseases and lower pharmaceutical production capacity in emerging countries have created a dependency on the export of pharmaceuticals, representing lucrative opportunities for the CMOs to expand their manufacturing facilities for finished products in such countries. These factors are projected to boost the segment’s growth during the forecast period.

The packaging segment accounted for a moderate share of the global market in 2023. This growth is attributable to the increasing focus of CMOs on offering significant packaging services to biopharmaceutical companies to ensure the efficient and timely reach of their products in the market.

REGIONAL INSIGHTS

Based on geography, the market has been studied across North America, Europe, Asia Pacific, and the rest of the world.

North America dominated the market with a revenue of USD 47.02 billion in 2023. The growth is attributable to the rising demand for effective and affordable drug production solutions, driven by the need for safer and more effective drugs, especially advanced therapies and biologics. This is propelling the outsourcing trend of such drugs to the Contract Manufacturing Organizations (CMO), which is expected to boost the regional market growth.

The Contract Manufacturing Organizations (CMO) market in Europe accounted for a moderate share in 2023. This growth can be attributed to the presence of key players, thereby contributing to a comparatively higher penetration of contract manufacturing services in the region. Moreover, the expansion of API production facilities caused by a major API shortage in countries, such as the Czech Republic, Poland, and Hungary is also projected to boost the regional market growth during the forecast period.

• For instance, in July 2024, Boehringer Ingelheim International GmbH, a European pharmaceutical company, was offering biopharmaceutical development and manufacturing services with a specific focus on mammalian cell culture and drug products.

Asia Pacific held the second-largest market share in 2023 mainly due to improvement in the healthcare infrastructure of Asian countries over the past decade. In addition, the rise in the number of pharmaceutical companies is expected to represent lucrative opportunities for CMOs to construct new facilities in this regions, thereby propelling market growth.

The rest of the world is expected to record a significant CAGR during the forecast period. The growth of these regions can be attributed to the growing focus of CMOs on expanding their presence in the underserved countries of various region. Moreover, the high burden of diseases and lower pharmaceutical production facilities are offering significant opportunities for CMOs to expand their presence in these regions. This factor is expected to boost the Contract Manufacturing Organizations (CMO) market growth.

KEY INDUSTRY PLAYERS

Lonza, Catalent, Inc., and Thermo Fisher Scientific Inc. Held Substantial Market Shares Owing to Strong Focus on Expansion of Manufacturing Facilities

The market is highly fragmented, with prominent players, such as Lonza, Catalent, Inc., and Thermo Fisher Scientific Inc. accounting for a substantial market share in 2023. The major market share of these companies is attributed to their strong focus on the expansion of manufacturing facilities to provide services to pharmaceutical companies worldwide. Moreover, their increased focus on signing collaborative agreements with other pharmaceutical companies to manufacture their therapeutic products is also expected to enhance their market share.

• For instance, in May 2023, Catalent, Inc. partnered with Siren Biotechnology to support the development and manufacturing of Siren Biotechnology's AAV immuno-gene therapies.

Other prominent players, such as WuXi Biologics, Samsung Biologics, and other small and medium-sized market players are focusing on various strategies, such as service expansion, geographic expansion, partnerships, and collaborations to enhance their market share in the forthcoming years.

List of Top Contract Manufacturing Organizations (CMO) Companies:

• Boehringer Ingelheim International GmbH (Germany)


• Almac Group (Ireland)


• Recipharm AB (Sweden)


• Dr. Reddy’s Laboratories Ltd. (India)


• FAMAR Health Care Services (Greece)


• Lonza (Switzerland)


• Vetter Pharma-Fertigung GmbH & Co. KG (Germany)


• Jubilant Pharmova Limited (India)


• Catalent, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• April 2024: Lonza collaborated with Acumen Pharmaceuticals, Inc. to manufacture Sabirnetug (ACU193), the first monoclonal antibody for the treatment of Alzheimer’s disease.


• May 2023: Catalent, Inc. partnered with Siren Biotechnology to support the development and manufacturing of Siren Biotechnology's AAV immuno-gene therapies.


• June 2023: Vetter Pharma-Fertigung GmbH & Co. KG announced plans to expand its manufacturing capacity in the U.S. to meet the increasing customer demands.


• February 2023: Lonza completed the expansion of its conjugation facility in Visp, Switzerland. This facility includes two manufacturing suites and supporting infrastructure.


• January 2023: Lonza celebrated the commencement of its first large-scale commercial drug product manufacturing site in Stein. The company's new facility allowed it to offer a complete range of services for the entire life cycle of a drug, including commercial supply.

REPORT COVERAGE

The report provides a detailed analysis of the competitive landscape. It focuses on crucial aspects, such as market dynamics. Additionally, it covers key industry developments, such as mergers, partnerships, acquisitions, regulatory scenarios, and technological advancements in the market. Moreover, it covers key aspects, including analysis of different segments in various regions, company profiles of key players, and the impact of COVID-19 on the market. The report also comprises qualitative and quantitative insights that contribute to the market growth.

Report Scope & Segmentation

ATTRIBUTE	DETAILS
Study Period	2019-2032
Base Year	2023
Estimated Year	2024
Forecast Period	2024-2032
Historical Period	2019-2022
Growth Rate	CAGR of 8% from 2024-2032
Unit	Value (USD Billion)
Segmentation	By Service API Manufacturing Finished Product Solid Dosage Forms Injectables Others Packaging
By Region North America (By Service and Country) U.S. Canada Europe (By Service and Country/Sub-region) Germany U.K. France Italy Spain Scandinavia Rest of Europe Asia Pacific (By Service and Country/Sub-region) India China Japan Australia Rest of Asia Pacific Rest of the World (By Service)