Europe’s CMO market set to double by 2018, says F&S

pharmafile | May 30, 2012 | News story | Manufacturing and Production |  CMO, Europe, F&S, R&D, Taylor, manufacturing 

The European market for pharmaceutical contract manufacturing will double from a value of around $10 billion last year to almost $21 billion in 2018, according to a new report from Frost & Sullivan. 

Driving the increase will be an increased appetite among big pharma companies to outsource production and focus resources on R&D, says F&S, while diminishing in-house production volumes thanks to patent expiries on big-selling products, will start to make outsourcing an attractive option. 

The consultancy firm warns contract manufacturing organisations (CMOs) against investing too much in expanding manufacturing in anticipation of meeting this increasing demand, as this could lead to overcapacity “which, in turn, could lead to the acquisition of smaller CMOs by larger ones,” says report author Aiswariya Chidambaram. 

All told, $45 billion-worth of pharmaceutical products and $30 billion of biologic products will lose patent protection  in 2011-2018, cutting utilisation rates of manufacturing plants operated by firms in half, says the report.

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Over the same period the market for contract manufacturing of biologic drugs will more than double, from just over $1 billion last year to $2.7 billion.

The increase in outsourcing prompted by this excess capacity will see big pharma’s contribution to the turnover of CMOs rise from between 10% and 25% at present, to 40% in 2013 and 50% by 2018. 

“Market prospects are extremely buoyant,” says the report, with pharma contract manufacturing predicted to grow at 10.9% a year and biologics set to ramp up by more than 12% per annum.

 On the downside, F&S says that the European regulatory environment is likely to place pressure on CMOs, with stricter requirements coming in on the back of contamination issues, safety compliance and drug recalls. 

“The costs of gaining regulatory approvals will make up a major chunk of fixed costs for CMOs,” says the report.

Phil Taylor

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