What are “3 Key Trends” shaping the CDMO industry in 2024 and beyond? Adragos Pharma’s chief executive officer, Andreas Raabe, shares his thoughts with Contract Pharma.

Slowdown for biopharmaceuticals and cell & gene therapies
Initially, biotherapeutics and cell and gene therapies (CGTs) were heralded as the next frontier for treatment, leading to a surge in investment as companies vied to enter and expand in these segments. However, the landscape is changing. These new modalities have encountered setbacks, with demand dwindling and prices falling. Many companies that paid top dollar to secure their position in these fields are now facing the reality that their business cases require substantial adjustments. The anticipated market dominance has not materialized as expected, leading to a revaluation of strategies in these once-promising areas. This trend suggests a period of consolidation and strategic recalibration as companies strive to align their capabilities with the evolving market realities.

On-shoring, near-shoring, and friend-shoring
The COVID-19 pandemic highlighted vulnerabilities in global healthcare systems, particularly the heavy reliance on intricate global supply chains and raw material sourcing from countries like India and China. The temporary cessation of key pharmaceutical ingredient supplies from India exposed the fragile nature of these dependencies, prompting a revaluation of supply chain strategies. In response, there is a growing trend towards “friend-shoring,” or reducing dependency on geopolitical rivals such as China for critical medications. This shift aims to enhance supply chain resilience by diversifying sourcing and manufacturing closer to home or within a network of allied countries. The move towards on-shoring, near-shoring, and friend-shoring is not just a logistical or economic consideration but a strategic one, influenced by global geostrategic considerations and the desire for greater security in pharmaceutical supply chains.

Big may not be so beautiful after all
The past era saw large CDMOs dominating the landscape, benefiting from the choice of projects, superior margins, first dips on innovation, and ample funds to deter competition. However, this trend is shifting. Prominent names in the CDMO sector have encountered a range of challenges, from quality and operational issues to sales slumps and organizational hurdles. Meanwhile, smaller players have demonstrated greater agility, humility, and innovation, navigating the industry’s challenges more adeptly. However, being too small also presents its challenges, lacking the scale to compete effectively on some fronts. Thus, the industry is witnessing a potential sweet spot among the upper-middle-class of CDMOs—companies that combine the agility and innovative capacity of smaller players with the scale and resources akin to larger firms. This balance enables them to compete effectively, adapt to market changes, and capitalize on emerging opportunities.