Emerging Trends in the CMO World

22 Jan

By Alejandro Zamorano, VP of Business Development, LSN

Competition among the CMO world is at an all-time high. With one of the largest electronic providers in the world recently announcing that it would be spending an additional $2b to expand its operation in Seoul, some are left wondering when the arms race will stop.

Since 2004, CMO’s have seen strong growth as the industry has shifted to contract organizations to complete non-core functions. Despite the recession and a dwindling amount of investment in the biotech field in recent years, CMO’s have remained resilient. The CMO space is a crucial component in the biotech world today, and below are four emerging trends that will bear fruit in 2013:

  • Patent expiry of blockbuster drugs will force the industry to become increasingly price-competitive. Because of this, CMO’s will see lower margins, but higher volume, as manufactures increase production capacity to build economies of scale. [1]
  • Big pharma will continue to outsource non-core functions as they become leaner organizations. In the next couple of years, big pharma will begin to form strategic partnerships with CMO’s and CRO’s as they become increasingly reliant on their services. [1]
  • The CMO industry will see strong growth in emerging markets where skilled labor is considerably lower. China and India will see the strongest growth in the space for the next five years. [1]
  • The CMO space will see vertical consolidation as major players try to increase service offering. The next generation of “CMOs” will also specialize in drug discovery, toxicology, clinical research & development, and manufacturing.

The CMO industry is expected to grow at an annualized rate of 12.5% for the next three years, making the industry worth around $40b by 2015. Despite the optimism, the CMO industry is starting to suffer from increased competition and lower margins. The next generation of CMO’s will need to grow quickly and leverage their relationship with their existing customers in order to maintain a competitive edge. [2]


[1] Downey, William. “Bio-CMO Industry Trends – Contract Pharma.” Pharmaceutical and Biopharmaceutical Contract Servicing & Outsourcing – Contract Pharma. N.p., n.d. Web. 21 Jan. 2013. <http://www.contractpharma.com/issues/2012-05/view_features/bio-cmo-industry-trends/&gt;.

[2] Auerbach, Mike. “Contract Manufacturing Trends.” Pharmaceutical Processing. N.p., n.d. Web. 21 Jan. 2013. <http://www.pharmpro.com/articles/2011/02/business-Contract-Manufacturing-Trends/&gt;.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: