CDMO 2030: What the Next Generation of Sponsors Will Demand

So far this year, oncology continues to dominate, along with metabolics, cardiovascular, infectious disease, hematology, and neurology treatments. If I shift my lens a few years ahead (CDMO 2030), we’re looking at a time where CDMOs will be seeing more and more discovery ventures shifting from single-target therapeutics to multi-target therapeutics, such as bispecific antibodies, CRISPR, and PROTACs. These forward the cause of the industry in delivering on precision promises and targeting previously “undruggable” proteins. 

But good ideas don’t come to market without a lot of good science, hard developmental work, and a favorable regulatory decision to evaluate how they got there and why.

Many sponsor companies are living through the uncertainty of the current Presidential Administration, which has presented several very current, and very real examples of how applications of the regulations directly influence and impact pharmaceutical companies. Would recent drug approvals or failures have occurred 12 months ago? Economists speak of such scenario evaluation as the “counterfactuals.” It’s a difficult question, because forecasting is very difficult on the best days. It’s also patently difficult (read: impossible) to “prove a negative”—that is, after some intervention, to say that something definitively didn’t happen because of the intervention. That’s why statistical modeling is necessary to show trends and compare the architecture of trends before and after to note the differences. 

A great tangible example in drug manufacturing is a batch failure: After identifying a known issue in a given process, and then resolving it, did the next few successive batches pass final product testing because of the process improvements? Or would they have probabilistically succeeded anyway—but you don’t know because your sample size was too small?

Some recent examples may or may not have been directly correlated with changes at the Department of Health and Human Services and FDA, including decisions on therapies from Sarepta, Ultragenyx, Replimune, Capricor Therapeutics, and several others. After all, unfavorable regulatory decisions are part of the process—and are why more than 90% of new molecules in development never reach the public. But it’s also naïve to not ask the question about how changes to the FDA have impacted drugs in the industry’s pipeline.

FDA Commissioner Marty Makary understands the FDA’s influence on patient access to therapies and recently noted that, “Drug developers and capital markets alike want predictability, so today, we’re one step closer to delivering it to them, with an ultimate goal of bringing cures and meaningful treatments to patients faster.” To this end, the FDA is embracing what it calls “Radical Transparency,” and is beginning to publish Complete Response Letters (CRLs) to the open FDA platform for viewing. The hope is that sponsors and CDMOs/CMOs will be able to see where deficiencies have been noted in peer companies and use that information to augment their own processes accordingly. 

Leveraging advanced tech

Sponsors often want to go with proven partners—the usage data across the CDMO/CMO industry bears this out. The CDMOs that are staying at the forefront of therapeutic advances necessarily also have been scaling up their technological competence with both manufacturing equipment and process upgrades to meet growing demands for different sponsor therapeutic modalities. And of course, the industry is moving toward more broad application of AI/ML than ever before. 

The top CDMO players are navigating the use cases of AI to help accelerate onboarding of new clients and processes, as well as targeting manufacturing data, and finding ways to interleave their AI with the AI of the sponsors transferring their products. AI is still in its nascent stage of being an extraordinarily powerful solution, for problems that we don’t yet know how to articulate and for questions that we don’t yet know how to ask. So, the future of CDMOs will be to continue to use technology to improve their performance and to attract new future-minded clients. 

Always keep in mind Amara’s Law in this context, however, which suggests that with any new technology, people tend to overestimate its short-term impact and underestimate its long-term effects. A direct example: The first website went live in 1991 (1994 for the general public), with aspirations of the world changing within a year. And even with that initial overestimate, nobody could have imagined the ways in which the internet changed how businesses transact, information gets shared, and how work get shared and accomplished. It was almost a decade until the number of functional websites were at a level to even appear on a non-log y-axis.

Talent shortages

When reviewing survey information from sponsor companies looking at CDMOs, and CDMO-reported data, one striking feature is the skills gap. CDMOs need to have top-tier talent to mirror their clients’ ability to produce novel therapeutics for the market. 

While M&A activity has softened over the last few years, we’re seeing signals of increased investment. But even then, the investment has shifted—more toward assets towards the end of Phase 2 clinical trials and Phase 3 clinical trials—so that investors don’t need to take on so much of the early pipeline risk and uncertainty (intrinsic drug uncertainty and regulatory uncertainty). CDMOs have a strong role to play in the ecosystem (as always), by providing competitive advantages for their clients. To do this, they need an appropriate balance of skills and experience, through employees, contractors, and consultants to address the skills gap. Three CDMOs recently reported that their reductions-in-force (RIFs) had created a “leakage of skills,” which put them at risk for properly executing future business. 

Some of these challenges with hiring and retention are regional, as more and more drug production moves out of historical industry epicenters like Boston, New Jersey, and California, and some are tied to CDMOs being unsure how to scale for the future, both near- and long-term—which many report is due to uncertainty over market flux, vis-à-vis regulatory agency changes as mentioned above. What is clear: CDMOs need to have the appropriate level of knowledge, skills, and experience to handle their clients’ complex needs—and the CDMO industry hasn’t crystallized a path for dynamically scaling with the external forces they’re contending with. 

2030 is coming…are you ready?

Whether or not you want it to, and regardless of if you’re ready, 2030 will arrive with the inevitability that Tuesday of last week arrived. CDMOs are unquestionable high-impact levers in the pharmaceutical industry, not only because of their ability to supply volume that their clients couldn’t provide alone—but also because they’ve been at the veritable forefront of driving regulatory discussions with the agency, advancing production technology and techniques, and back-propagating that into the development of all therapeutics. 

Twenty-five years ago, sponsor companies looked down on CDMOs as just widget manufacturers for their intellectual property. Now the relationship between sponsor and CDMO is so symbiotic that countless articles and books have been written on the cross-pollination between the two, and the industry wouldn’t be where it is today without that relationship.

There are many ways to plan and insulate for the future, with many being failures in hindsight. But with so much investment and reshoring happening in the U.S., promising new drugs in the pipeline, the inexorable forward march of technology, and solving for talent gaps—the future is one that we’re not captive of, but one which we can create. 

As former U.S. Chief Data Scientist, DJ Patil, said, “Dream in years, plan in months, evaluate in weeks, ship daily.” We’ve got work to do!

Note: Ben will be keynote for Contract Pharma’s 2025 Conference & Expo in New Brunswick, NJ (Sept. 18-19). Turn to page 62 for the Conference Preview.

Ben Locwin is an industry executive who has worked in Top 10 Pharma and CDMOs, and concurs with Jeff Bezos’ assessment that you should “focus on what makes your beer taste better” – meaning: concentrate on your core competencies, and outsource the rest to gain an unfair advantage in speed and expertise. He has been featured in top-tier media such as the Associated Press, Forbes, The Wall Street Journal, USA Today, Axios, NPR, and many others.