Pharmaceutical Contract Manufacturing Market Analysis and Forecast 2024-2028

The pharmaceutical contract manufacturing market size is projected to increase by USD 64.8 billion and grow at a CAGR of 8.1% between 2023 and 2028. Market growth is driven by patent expiration and rising demand for generic drugs, along with increasing emphasis on core competencies and robust research funding. However, challenges such as capacity utilization constraints, the conventional nature of Contract Manufacturing Organizations (CMOs), and stringent regulatory frameworks hinder market growth. Addressing capacity limitations, operational transformation of CMOs, and regulatory complexities is critical for ensuring sustained industry growth

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Market Segmentation

End-User Outlook

• Big pharmaceutical companies
• Small and medium-sized pharmaceutical companies
• Generic pharmaceutical companies

Service Outlook

• API/Bulk Drug Manufacturing
• Final Dosage Form
• Secondary Packaging

Region Outlook

• North America

  • The U.S.

  • Canada

• Europe

  • U.K.

  • Germany

  • France

  • Rest of Europe

• Asia

  • China

  • India

• Rest of the World (ROW)

  • Australia

  • Argentina

  • Rest of the world

Segment Analysis

Big Pharmaceutical Companies Segment

The big pharmaceutical companies segment is expected to witness significant growth. These companies leverage Contract Manufacturing Organizations (CMOs) to extend technical resources while minimizing overhead costs. Over the past 25 years, CMOs have become essential for pharmaceutical production. Big pharmaceutical firms focus on core competencies, outsourcing formulated drug production rather than investing in in-house final dosage manufacturing.

The segment was valued at USD 56.20 billion in 2018. Growing competition and shrinking profit margins have prompted pharmaceutical firms to review production techniques and R&D investments, strengthening partnerships with CMOs. These collaborations are expected to drive significant growth in the pharmaceutical contract manufacturing market.

Market Dynamics

Key Market Driver

• Patent Expiry and Growing Demand for Generic Drugs
  • Generic drugs offer cost-effective alternatives with equivalent efficacy and safety.
  • Governments worldwide encourage generic drug adoption to lower healthcare expenses.
  • The expiration of pharmaceutical patents accelerates generic drug market growth, leading to increased outsourcing to Contract Development and Manufacturing Organizations (CDMOs).
  • In South Korea, over 51 pharmaceutical patents covering 150+ products expired in 2023, fostering generic drug manufacturing outsourcing.

Significant Market Trend

• Rising US FDA-Approved Manufacturing Facilities in Emerging Markets
  • China and India are key players in contract pharmaceutical manufacturing.
  • Regulatory reforms in China now allow Marketing Authorization Holders (MAH) to outsource drug production to licensed CMOs.
  • Foreign pharmaceutical firms increasingly outsource drug manufacturing to China and India, boosting CMO adoption.

Major Market Challenge

• Capacity Utilization Constraints
  • Approximately 35% of CMOs face minor constraints (time, cost, resources).
  • 20% of CMOs experience moderate to severe constraints during manufacturing.
  • Limited approved production sites lead to bottlenecks.
  • High downstream cleaning costs and lack of experienced personnel further limit production capacity.

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Key Players

• Almac Group Ltd.
• AbbVie Inc.
• Baxter International Inc.
• Boehringer Ingelheim International GmbH
• Cadila Pharmaceuticals Ltd.
• Charles River Laboratories International Inc.
• Cmic Holdings Co. Ltd.
• Dalton Pharma Services
• Dr. Reddy’s Laboratories Ltd.
• Grifols SA
• Laboratory Corp. of America Holdings
• Lonza Group Ltd.
• Lupin Ltd.
• Novotech Health Holdings
• OPTIMAPHARM d.o.o.
• Parexel International Corp.

Latest Market Developments

• December 2024: Lonza expanded its pharmaceutical contract manufacturing facilities in Europe to enhance biologics production.
• November 2024: Catalent launched a new oral solid dosage production facility in North America, improving efficiency and time-to-market.
• October 2024: WuXi AppTec partnered with a leading pharmaceutical firm to co-develop next-generation gene therapies.
• September 2024: Samsung Biologics acquired a biopharmaceutical manufacturing plant in South Korea, strengthening its contract manufacturing capabilities.

Future Market Insights

The pharmaceutical contract manufacturing market is thriving, driven by outsourced biopharmaceutical production, bioprocess outsourcing hubs, and serialization technologies. Small and mid-sized pharmaceutical firms collaborate with CMOs for specialized drug formulation and biologic manufacturing. Advanced manufacturing processes, such as continuous production and digitalization, further support market growth. The sector continues to evolve, focusing on oncology drugs, vaccines, and personalized medicines, ensuring efficient pharmaceutical supply chains and driving global drug innovation.