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Pharma & Biotech 2017 – Review of Outsourced Manufacturing

By Achim Newrzella 26 Jan 2017

This report provides an in-depth review of the pharmaceutical outsourced manufacturing sector, including latest data on the pharmaceutical and CMO market, industry trends and growth drivers. By 2015, the global Pharmaceutical market reached $1.1 trillion and is expected to continue growing at approx. 5.5% per annum. Our analysis estimates that the total outsourced manufacturing market reached $71.5bn in 2015 and is growing at 6.6%. The sector’s faster growth above the pharmaceutical industry is helped by the anticipated transition to more outsourcing, as well as the good growth within particular subsectors. Small molecules dominate the pharmaceutical sector (approx. 83% by revenue) and are expected to continue doing so for some time; however, growing slower than biologics.

At the time of our last report, the outsourced sector in the West had endured some years of relatively low growth due to the pressure of low cost Eastern manufacturers, compounded by the relatively modest growth in demand for Contract Manufacturing Organisation (CMO) services. Since then, there has been a significant trend in repatriation of manufacturing from the East spurred by supply chain security concerns linked with increasing pressure from US and European regulators. In addition, there has been cost inflation in the East which has eroded the competitiveness and attractiveness of Asian suppliers.

Overall, the prospects for the sector remain strong, linked to the expected growth in healthcare. There is a strong case for investment in particular segments, subject to appropriate valuation and due diligence. This report highlights some of the trends that should be in the minds of CEOs, CFOs and investors.

To discuss the contents of this white paper please contact Achim Newrzella (anewrzella@resultsig.com)

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Achim Newrzella

Analyst

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