CDMOs to Drive Innovation in the Pharmaceutical Industry
With changing customer demand, CDMOs are adjusting their business model and setting a clear course toward technology leadership, which will become an important factor in the coming years.
FREMONT, CA:As flexible third-party service providers, CDMOs support pharmaceutical companies at every stage of the process of making medicines, such as by providing services in the research and development stages, providing support in manufacturing, and offering to formulate and finish processes. CDMOs have been rising in an increasingly dynamic mergers and acquisitions (M&A) landscape driven by consolidation. New developments are likely to continually change the CDMOs’ position.
Earlier CDMOs operated on a business model that predominantly focused on serving as external service providers for manufacturing advanced pharmaceuticals. This model included capacity addition through the acquisition of manufacturing facilities from pharmaceutical companies. However, CDMOs have increasingly become innovation leaders, covering more pharmaceutical business sectors and adding new revenue streams. Through acquisitions, CDMOs can rapidly expand their capabilities and thereby be able to deliver advanced services at scale.
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This change of focus has been accompanied by a transformation in the M&A landscape in the market. In the last decade, for example, the rise of novel modalities such as cell, gene, or mRNA therapies and innovative vaccines necessitated a significant investment in new additive manufacturing capabilities for viral vectors, cell manipulation, nucleic acids, and lipid-based formulations.
Well-positioned CDMOs can flexibly alter their production lines to meet the increasing demand for smaller, more diverse projects. New partnerships have arisen, enabling CDMO players to fuel the rapid growth of capacities and capabilities, helping the industry succeed in ramping up in areas such as vaccine production.
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