One of the big trends in pharma outsourcing in recent years has been a move to contracting out manufacturing services. Frost & Sullivan picked up on that trend in a recent market view, plotting out a double-digit growth rate in Europe over the next 7 years as CMOs pick up billions of dollars in new contracts.
It's all about core competencies, says Frost & Sullivan analyst Aiswariya Chidambaram. Pharma companies have enough trouble managing R&D and marketing, so they're turning to contract manufacturers to shoulder the load on manufacturing work. Frost & Sullivan projects the European pharmaceutical contract manufacturing market to grow at a compound annual growth rate of 10.9% from 2011 to 2018, with its biotech counterpart poised to register a compound annual growth rate of 12.1% over the same time frame.
But in hard dollar terms, the $10.02 billion CMOs earned in 2011 will more than double to $20.75 billion on the pharma side of the business in 2018. Over the same period, the European biotech contract manufacturing market is set to expand from $1.21 billion to an estimated $2.67 billion.
"As pharmaceutical and biotech companies strive to enhance their internal core competencies, outsourcing is likely to become increasingly entrenched as a strategic manufacturing option," notes Chidambaram. "The impact of the economic crisis, coupled with the poor performance of the venture capital industry in Europe, has underlined the popularity of contract manufacturing as it has become synonymous with cost-cutting and the timely entry of products into the market."
- here's the report from Frost & Sullivan
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