Contract Manufacturers and Research Organizations Continue as Essential Element of Pharma Toolbox

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Contract manufacturing organizations (CMOs) and contract research organizations (CROs) remain a vital part of the Pharmaceutical-Biotech Industry, and as the economy recovers and orders begin to pick up, so will their capital plans. These projects typically run in the $1 million to $5 million range, although many represent a much larger investment.

Click here for a table showing the five highest-value active North American Pharma-Biotech Industry CMO projects.

With Big Pharma companies engaged in huge cost-saving initiatives, contract manufacturers are reaping the bounty. Many companies are shedding plants and the accompanying operational headaches and turning to CMOs to manufacture the product. A number of them are selling the plant and all equipment to a CMO and then "buying" the finished product from the new owners. In many cases, the same staff remains employed, and production never misses a beat.

A recent survey compiled by Pharmaceutical Manufacturing magazine revealed that drug companies are outsourcing everything from R&D and clinical trials to such back-office functions as HR, IT, marketing and sales, and even finance. In response to their rising importance within the industry, CMOs continue to expand steadily, and there are signs that these investments are growing in scope past the typically modest total investment value of several million dollars per project.

CMOs are adding capabilities in chiral chemistry, olignonucleotides and peptides, high-potency, and hazardous and extreme reactions. CROs, including clinical, drug development and testing laboratories, are also enjoying a surge of growth that is expected to continue in the coming years.

A recent report by Reportlinker revealed the following statistics regarding the CMO/CRO industry segment:

• The global pharmaceutical contract manufacturing and contract research organizations' revenue reached $196.5 billion in 2010, $217.9 billion in 2011 and is projected to reach $360.6 billion by 2016, increasing at a compound annual growth rate (CAGR) of 10.6%.


• North American markets' revenues for bulk drugs in contract manufacturing in 2009 was about $8.8 billion and increased to about $9.7 billion in 2010. It is projected to reach $16.6 billion by 2016, for a five-year CAGR of 9.4%.


• The total market for solid-dosage form contract manufacturing in 2010 was valued at about $9.1 billion. This is expected to total $10 billion in 2011 and forecast to cross $16.1 billion by the end of 2016 at a CAGR of 10% for the five-year period.

Seeking greater agility in the production process and the ability to match supply chains with constant shifts in global product demand, the industry relies heavily on outsourcing, utilizing both CMOs and CROs. Although an essential component, it is not only Big Pharma in the mix. Smaller drug-makers also turn to this segment for everything from active pharmaceutical ingredients (APIs) and intermediates to finished dosage products, produced in clinical- to commercial-scale quantities.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.