What are “3 Key Trends” shaping the CDMO industry in 2023 and beyond? Samsung Biologics’ lead market intelligence specialist, Sunny Choi, shares her thoughts with Contract Pharma.

Growth by expansion
A common theme that has been observed in the global biologics CDMO market is the rapid growth by expansion via CAPEX investments and deals to acquire new facilities, technologies, and capabilities to meet the growing demand for biologics. development and manufacturing services. The global biologics CDMO market is one of the fastest areas of growth that is expected to grow at a CAGR of 11.5% during 2022-2027 and reach $21.9 billion by 2027.

Big players such as Lonza and Samsung Biologics have heavily invested in CAPEX in the last few years to add more capacity to produce complex biologics. Last year, Lonza invested about $1.3 billion in biologics CAPEX alone, up 36% from 2021, towards the production of mAbs, mRNA, and others. Samsung Biologics, the world’s largest CDMO by capacity, with its Plant 4 expected to be in full operation by mid-2023, will offer a 604,000-liter manufacturing capacity from its four plants for complete end-to-end DS and DP manufacturing services for mammalian-based biologics, mRNA vaccines, and therapeutics. Then by 2025, the world’s largest CDMO is expected to equip itself with a total of 784,000-liter manufacturing capacity upon the completion of its Plant 5, an inaugural plant for the company’s second Bio Campus.

Since it would take some time for post-COVID-19 dynamics to pan out and fill any holes that may have been left behind from the COVID demand that has died down, it remains to be seen how things will develop in 2023. However, biologics CDMOs are expected to continue with their growth by expansion strategy beyond 2023 as the biologics CDMO market continues to grow, boosted by strong demand for biologic drugs and the ever-growing number of new biologics pipelines.

Raw materials suppliers entering the CDMO space as a way of vertical integration
The biologics CDMO market is also witnessing a trend of vertical integration of raw materials suppliers entering the CDMO space, leveraging their expertise and experience in the biopharmaceutical industry. By entering the CDMO space, raw materials vendors can offer integrated solutions to their clients such as customized media formulations and supply chain management services on top of the standard contract manufacturing agreements, which may help them gain a competitive edge over other CDMOs that rely on external suppliers for raw materials.

For example, Thermo Fisher Scientific, a leading provider of bioprocessing equipment and consumables, acquired Patheon, a global CDMO for small molecules and biologics, in 2017. Similarly, Merck KGaA, a major supplier of cell culture media and reagents, acquired AmpTec, a CDMO for mRNA-based therapeutics and vaccines, in 2021. Merck KGaA also acquired Exelead, a CDMO that specializes in lipid nanoparticles, in 2022 to strengthen its CDMO offering for mRNA manufacturing.

And just recently, Danaher, a global provider of bioprocessing solutions and equipment that owns the Cytiva brand, was rumored to take over Catalent in order to enter and grow presence in the CDMO market. Although it’s not clear if anything will ever materialize between Danaher and Catalent, Danaher already has set foot in the CDMO market with its acquisition of Aldevron, a CDMO that specializes in mRNA services and plasmid DNA production, for $9.6 billion in 2021.

Persistent geopolitical tension and supply chain risks
The COVID-19 pandemic has highlighted the importance of ensuring a resilient and stable supply chain for biologics development and manufacturing. To add to that, the growing geopolitical tension against China and in other parts of the world have only heightened the need for effective supply chain management to mitigate any supply risks that may adversely affect the availability and quality of raw materials, equipment, and personnel needed for biologics production.

Growing geopolitical tension poses risks such as manufacturing delays and regulatory uncertainties, which in turn may easily compromise the quality, speed, and efficiency of the contract manufacturing services provided by the affected CDMOs. Just last year, the U.S. Department of Commerce added WuXi Biologics to its Unverified List as they were unable to perform site visits in China for two years. WuXi Biologics was later taken off from the list as travel restrictions due to COVID-19 were lifted. However, several Chinese companies including biotechs are still listed on the U.S. Department of Commerce Entity List, and are subject to export restrictions for allegedly collecting and analyzing genetic data that contribute to the Chinese military.