Dose CMO industry performing strongly despite challenges of increasingly complex drug production

The dose contract manufacturing organisation (CMO) market in 2018 grew 6.4% from its 2017 value. This growth rate is a return to the 5–7% year-on-year rate observed in the market in the five years from 2010–2014, and is the highest year-on-year growth rate since 2012. Private equity (PE) has also shown a continued interest in the dose CMO industry, says GlobalData, a leading data and analytics company.

Three acquisitions of dose CMOs by PE firms occurred in 2018, similar to the average number of yearly PE firm acquisitions (3.4) across the 2013–2017 period. Despite the changing nature of medicines and challenges to the dose CMO industry, it is still perceived as lucrative by investors.

The company’s latest report, ‘PharmSource – Contract Dose Manufacturing Industry By The Numbers: Composition, Size, Market Share And Outlook – 2019 Edition, characterizes the contract dose manufacturing industry through a number of quantitative dimensions, including revenues, dosage form breakdowns for revenues, and financial performance of the top public CMOs. The report is vital for establishing an understanding of the industry and the features of some of the largest participants.

As biologics become increasingly approved and utilized, injectables will be used more often. However, these are more difficult to manufacture while retaining sterility, which requires techniques such as terminal sterilization, aseptic filtration and aseptic formulation. Most injectable oncology drugs will also require containment for manufacture. These require expensive specialist offerings and expertise that not every CMO will be able to perform.

Adam Bradbury, Pharma Analyst at GlobalData, commented: “As drug production becomes increasingly complex from a molecular and regulatory standpoint, innovative CMOs stand to prosper. This is especially true as the drugs pipeline favors the development of high potency active pharmaceutical ingredients (APIs) for oncology, where the facilities, expertise and equipment related to their manufacture are prohibitively expensive for smaller pharma companies.”

The US has the highest number of contract dose manufacturing facilities with 184, followed by the *5EU, India and Japan. The US also has 123 solid dose, 64 injectable and 43 non-sterile semi-solid and liquid dose manufacturing facilities, as well as the largest number of sites for these individual dosage forms.

Bradbury continues: “The overall market performance of dose CMOs was influenced by the top ten companies, which collectively account for 39% of all dose revenues. All of these companies have headquarters in the US or Europe. Top players included Catalent, Patheon/Thermo Fisher and Aenova Group”.

In 2018, Dose CMOs acquired four facilities, returning to similar levels seen before the frenzied facility acquisition activity observed in 2017.

Bradbury concludes: “There were fewer pronounced merger and acquisitions (M&As) and consolidations affecting dose CMOs in 2018 than 2017. The Patheon/Thermo Fisher Scientific and Capsugel/Lonza deals covered in GlobalData’s report were particularly high-profile/high-value deals in 2017. Dose CMO M&A activity in 2018 was not as notable.”

*5EU = France, Germany, Italy, Spain, and the UK

Information based on GlobalData’s report: PharmSource – Contract Dose Manufacturing Industry By The Numbers: Composition, Size, Market Share And Outlook – 2019 Edition

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