Top pharma Contract Manufacturing Organizations (CMOs) are investing in specialist facilities for manufacturing small molecule active pharmaceutical ingredients (API) requiring containment, according to the GlobalData report, ‘Contract Small Molecule API Manufacturing Industry by the Numbers – 2021 Edition’.

High containment facilities protect operators against exposure to dangerous products and prevent cross-contamination of standard medicines with highly potent products, which can be toxic even at small doses.

At the same time as investing in controlled drug manufacturing, these companies have decreased their overall number of small molecule API manufacturing facilities, which suggests a move towards high value specialized manufacture and away from large volume low value simple API production, according to GlobalData.

Adam Bradbury, Pharma Analyst at GlobalData, comments: “All of the evidence indicates that containment facilities are in high demand and will be increasingly so in future as the oncology pipeline and the use of cytotoxic (anti-cancer) drugs continues to grow. CMOs with containment capabilities are likely to be at an advantage compared to those without, as the number of marketed high potency APIs tends to increase over time.”

One third of small molecule API contract facilities worldwide offer containment capability, and less than one tenth offer controlled substance capability. CMOs can charge more for containment and controlled substance services because they are rare and in demand. A controlled substance is one whose manufacture, importation, possession, use, or distribution is regulated by law because of the possibility of illicit use. Controlled substance capabilities and facility requirements can be prohibitively expensive, with US Drug Enforcement Administration (DEA) requiring strict security for the production and storage of the API, vetting of personnel, perimeter fencing, steel vaults, and electronic monitoring for substances such as opioids.

Bradbury continues: “The most common acquirers of CMOs during 2018-2020 were private equity /venture capital/investment firms, which increasingly view the CMO industry as a prudent choice to provide a good return on investment. Private equity firms now own many of the leading CMOs, such as Recipharm, Cambrex Corp, and PCI Pharma Services. This indicates PE perceives small molecule API manufacturing as a profitable opportunity.

“Despite industry excitement and investment in large molecule drugs, there is still significant demand for small molecule API manufacture. Approximately 97% of marketed drugs are small molecule products. An increase in high potency small molecule APIs, and the rise of oncology pipeline drugs coupled with small or virtual pharma companies unable to acquire or access this capability in-house means that demand for innovative specialized capabilities will remain high.”

*The analysis includes both Dedicated Contract or Excess Capacity CMOs. A Dedicated Contract manufacturing model is offered by Contract Manufacturing Organizations (CMOs) which offer only outsourced contract services and are not a Marketing Authorization Holder (MAH). An Excess Capacity manufacturing model is offered by pharmaceutical companies which produce their own products and also offer contract services using their excess production capacity, but are also a MAH.