The growth in outsourced commer- cial and development biopharma- ceutical programs drives the demand for contract manufacturing services.
The biopharmaceutical contract manufacturing market experienced double-digit
growth over the past three years as new
biopharmaceuticals reached the market
or entered the pipeline. High demand
plus low capacity expansion rates caused
high industry utilization rates last year.
In response, biopharmaceutical contract
manufacturing organizations (CMOs) are
aggressively adding capacity and investing
in productivity improving technologies.
The information presented in this article
DEMAND AND UTILIZATION RATES
draws from HighTech Business Decisions’
latest report, “Biopharmaceutical Contract
Manufacturing 2017: Growing Markets, Ca-
pacities, and Innovations.” This report uses
primary research from senior-level execu-
tives and scientists at pharmaceutical and
biotechnology companies plus executives at
contract manufacturing organizations. For
purposes of our article, High Tech Business
Decisions defines biopharmaceuticals as
complex molecules created through the ge-
netic manipulation of living cells or organ-
isms used for therapeutics or vaccines.
Over the past three years, the biopharmaceutical contract manufacturing market grew at a compound annual rate of
13%, higher than the previously projected
growth rates of 8% to 10%. Both higher
volumes and higher prices drove this
growth. The growth in volumes occurred
for both clinical and commercial products.
Last year, the biopharmaceutical contract
manufacturing markets reached $3.8 billion. This year, the biopharmaceutical contract manufacturing market will grow 8%
and surpass $4 billion.
During the first half of this decade, ca-
pacity utilization rates at most CMOs were
below ideal levels. The industry had excess
capacity. Capacity was readily available.
With large fixed costs to cover, the CMOs
experienced an intensely competitive mar-
ketplace causing downward price pressure
and less favorable contract terms. Thus,
most CMOs limited their capacity expan-
sion plans. With low capacity investments,
capacity increased at a slower rate than de-
mand. This led to very high capacity utiliza-
tion rates with little or no excess capacity
available by 2016 (see Figure A). Further-
more, with the acceptance of single-use
bioreactors, CMOs could economically add
production capacity in smaller increments.
As a result, contract mammalian cell cul-
ture capacity grew at a compound annual
rate of 4% from 2011 through 2014.
To confirm higher utilization rates, we investigated CMOs booking levels in 2016.
From our study, a large majority of the
The market continues to grow, projected to exceed $4 billion in 2017
President, High Tech Business Decisions