The market for pharmaceutical contract manufacturing earned $13.43 billion in revenue during 2012 and it may go as high as $18.49 billion in 2017, Frost & Sullivan said.
The sector includes: injectable doses, liquid doses, semi-solid doses and solid doses.
The report notes how pharmaceutical companies concentrate on “core competencies,” which has led to more outsourcing and helped the pharmaceutical contract manufacturing market.
Another increase for outsourcing may come from blockbuster drug patents expiring, the report said.
"Investments and capacity expansions in the injectable dose formulation segment are in the near future, as it is likely the most significant source of income for the global pharmaceutical contract manufacturing industry," Frost & Sullivan analyst Aiswariya Chidambaram said in a statement. "Cytotoxics manufacturing, in particular, offers immense growth potential, given the demand from the cancer research and therapy segments."
Frost & Sullivan also notes how the pharmaceutical contract manufacturing market is “highly fragmented with many contract manufacturing organizations (CMOs) relying on one client for more than 50 percent of their revenue.”
“Coupled with huge tax incentives and lower inventories for low-volume products, this creates immense pricing pressures for CMOs,” the firm said in a statement.
The United States and Europe are major markets for outsourcing finished dose formulations and sterile preparations, Frost & Sullivan said.
One example of a U.S.-based company is Pharma Tech Industries (PTI), a contract manufacturer and packager. It is believed to be largest contract processor and packager of powder products. It makes over one billion effervescent tablets a year, “moves over 50 million pounds of powders yearly, and the numbers for their cotton swab and injection molding production lines are equally large,” according to a report from Advantage Business Media.
In addition, Asian CMOs are often used for active pharmaceutical ingredients, intermediates and generics. Also, because of lower costs, Asian CMOs, such as in China, India and Singapore, could become “favorable destinations, particularly for solid dose formulations,” Frost & Sullivan said.
Watch out for more acquisitions and alliances in the sector, too.
"Consolidation in the form of acquisitions and strategic alliances to gain access to new, emerging markets and niche segments will be crucial for both small and large CMOs," Chidambaram predicts. "Large CMOs can broaden their geographic presence, while small CMOs can leverage the technical expertise and resources of large CMOs to enlarge their footprint."
Edited by
Alisen Downey
