Thanks to a burgeoning Asian market and industry-wide cost-cutting, the CMO business will more than double in size by 2018, GBI Research says, expanding from $26 billion in 2010 to $59.9 billion.
The majority of the CMO industry operates out of the U.S. and Europe at the moment, but regulatory policies make it easier to do business in Asia, according to GBI. And with the patent-cliff woes forcing drugmakers to slash costs where they can, it's a perfect environment for overseas CMOs to profit, Outsourcing-Pharma reports.
Pharma companies spend up to 20% of their total revenues on manufacturing, GBI says, and they can cut down that cost by employing CMOs in Asia. The industry drops about $150 billion per year on manufacturing, and, as CMOs build their capacity and get more technologically advanced, more and more of that money is likely to be diverted to contract firms, the organization says.
The only barrier for Asian CMOs: intellectual property laws. The continent lags behind the rest of the world in protecting patents, and that has allowed Eastern European firms to gain footing in the market, according to GBI. However, thanks to its favorable regulatory climate and low-cost production, Asia is still primed to overtake Europe in the CMO game by 2015, GBI says.
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