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Global Healthcare CMO Market: Abundance of Skilled Labor at Slender Cost renders Asia Pacific Highly Lucrative, reports TMR

Posted on Nov 15, 2016

The global market for healthcare CMO (contract manufacturing outsourcing) is highly fragmented with no player holding a clear lead. Some of the prominent players in the global healthcare CMO market are Catalent Pharma Solutions, Inc., Lonza Group, Boehringer Ingelheim GmbH, DSM and Patheon, Inc. These five players accounted for merely 24% of market in 2012. 

Catalent Pharma Solutions, Inc. has been projected as the market leader since 2013 when it acquired Relthy Laboratories (Brazil) to expand its geographical presence in Latin America and provided its customers with advanced drug delivery technologies. The company also signed a contract with Biota Pharmaceuticals to develop and provide packaging and filling capabilities for clinical trial supply materials. 

The global market for healthcare CMO is projected to reach a valuation of US$246.5 bn by 2019, the end of the forecast period. 

Pharmaceutical CMO Remains Significant Market Segment, by Service Type

The global healthcare CMO market, on the basis of service type, is segmented into pharmaceutical contract manufacturing services and medical devices contract manufacturing services. Among these, market for pharmaceutical contract manufacturing segment accounts for the most prominent market share and is projected to reach a valuation of US$146.64 bn by 2019. The contributing factors for pharmaceutical CMO leading the market include high cost pressures, the expiration of a large number of blockbuster drugs, the increasing demand for generic products and the rise in investments by pharmaceutical companies towards R&D activities. 

The pharmaceutical contract manufacturing services market is further segmented into contract active pharmaceutical ingredients (API) market, final dosage formulations (FDF) market, and packaging. Among these, the market for contract API manufacturing accounts for the most significant share and is estimated to reach a valuation of US$78.45 bn by 2019. 

Geographically, North America accounts for the dominant share in the healthcare CMO market and is estimated to sustain the demand at a 32.9% share in the market until 2019. However, Asia Pacific is considered to be the most attractive regional market during the forecast period, accounting for a market share of 31.2% by 2019. The factors contributing towards the strong growth of this market include low labor cost, a high availability of skilled workforce, the adoption of innovative technologies, and strict intellectual protection property rights. Additionally, the establishment of several prominent contract manufacturers in this region would also drive the market in the coming years. Europe and ROW are expected to exhibit a relatively lower growth rate as compared to Asia Pacific. 

Intensely Competitive Healthcare Industry Compelling Companies to Recalibrate Market Strategies

Rising cost pressures, cost-benefit management, and the inclination of various pharmaceutical companies to focus on core competencies such as marketing and R&D have forced most pharmaceutical and medical device manufacturers to adopt cost saving options such as outsourcing and offshoring certain processes. Additionally, intense competition in the healthcare industry is compelling these companies to recalibrate their marketing strategies and explore new opportunities in product design, development, and manufacturing. Consequently, most pharmaceutical and medical device giants have adopted the strategy of outsourcing to specialist service providers such as contract manufacturing organizations (CMOs). This would help companies to free up their in-house resources for other crucial projects and bring improved efficiency in terms of costs, regulatory norms, and timelines. Conversely, the report also explores restraining factors such as quality concerns, non-compliance of regulatory requirements, and failure to deliver supplies on time. 

According to the author of the report, “There has been a seismic shift in the way drugs are being developed, manufactured, and delivered worldwide. As a result, innovative pharmaceutical and biotech companies are gaining ground. Additionally, emerging economies such as China, India, and Brazil are evolving as strong participants in the global healthcare CMO market.” 

The information presented in this review is based on a Transparency Market Research report, titled, “Healthcare CMO Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2013 - 2019.” 

Key Segments of the Global Healthcare CMO Market 

Global Healthcare CMO Market, by Service Type

  • Pharmaceutical Contract Manufacturing Services
    • APIs (Active Pharmaceutical Ingredients) Manufacturing
    • FDF (Finished Dosage Formulation) Development and Manufacturing
      • Solid Dosage Formulations
      • Semi-solid and Liquid Dose Formulations
      • Injectable Dose Formulations
    • Packaging
  • Medical Device Contract Manufacturing Services
    • Design Outsourcing
    • Device Manufacturing
      • Material Processing Services
      • Electronic Manufacturing Services
      • Finished Products
    • Final Goods Assembly 

Global Healthcare CMO Market, by Region

  • North America
  • Europe
  • Asia Pacific
  • Rest of the World (ROW)

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