01 Dec, 2023 Pharma contract manufacturing sees historic surge amidst inflation and investment challenges, reveals GlobalDataPosted in Pharma
In the dynamic landscape of pharmaceutical contract manufacturing, the year 2022 witnessed unprecedented growth in revenues, marking the highest surge since 2011. The total commercial dose contract manufacturing organization (CMO) contract revenue year-on-year (YoY) soared by an impressive 8.4% in 2022. This growth, fueled by persistent high inflation, occurred amid the waning demand for COVID-19 vaccines. However, challenges arise as manufacturers grapple with constraints in investing in innovation due to escalating costs in transport, energy and labor, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, “Contract Pharmaceutical Dose Manufacturing Industry: Composition, Size, Market Share, and Outlook – 2023 Edition,” reveals that the contract manufacturing industry for finished dose pharmaceuticals had the highest growth rate during the last decade in 2022.
This growth rate is the highest recorded since 2011 for commercial contract dose manufacturing revenues, and surprisingly exceeds the strong growth experienced in 2021.
Adam Bradbury, Pharma Analyst at GlobalData, comments: “Pharma manufacturers will likely be unable to invest as much in innovative capabilities as they did previously due to the current environment of high inflation and quickly rising interest rates, which will increase costs related to transport, energy, and labor. Instead, many manufacturers will refocus on operational efficiency.
“On the positive side, drug manufacturers will be able to raise their prices, which will increase sales revenue, although government legislation will attempt to curb drug prices. Consumers may not react favorably to increasing prices.”
Inflation has reportedly powered sales growth for dose CMOs despite the demand for COVID-19 vaccines and therapies waning in 2022, with vaccination drives being completed in developed markets and the now dominant Omicron COVID-19 variant being a milder illness than the original and Delta strains.
Bradbury concludes: “Stubbornly high inflation and interest rates are the likely cause of reduced private equity investment activity for dose CMOs in 2022, with firms becoming reluctant to accrue debt and finding increasing difficulty in accessing capital.”