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Is the market still growing?

The outlook of CDMO for active pharmaceutical ingredients (APIs): Is the market still growing?

Lab Ofichem is a CDMO in the field of APIs. This means that Lab Ofichem is a “Contract Development and Manufacturing Organization” that serves pharmaceutical companies with services ranging from API process development to analytical validations.

Active Pharmaceutical Ingredients (API) are the foundation of medicines. The API is the part of the drug that produces the intended effect in the diagnosis, cure, mitigation, treatment or prevention of disease or that affects the structure or any function of a human or animal. Many pharmaceutical companies outsource (a part of) the API R&D work to contract partners. Partnering with the right contractor is therefore a critical decision for a pharmaceutical company to make.

Contract partners

Not all pharmaceutical contract partners are however the same. Pharmaceutical companies can basically choose among three types of development partners: CROs (Contract or Clinical Research Organizations) that focus on discovery services, CMOs (Contract Manufacturing Organizations) that emphasize manufacturing at a larger scale, and CDMOs that offer the full range of services from discovery to commercial production. Historically, CDMOs operated on a business model which predominantly focused on serving as external service providers for manufacturing mature pharmaceuticals. Nowadays, CDMOs have increasingly become leaders of innovation and are covering more areas of the pharmaceutical business. In the segment of CDMOs, two main-line types of offerings are observed: specialty CDMOs and “one-stop-shop” CDMOs.

Developing APIs and validating analyses is the pure type of co-creation work that is marked by long term partnerships.

Full-service CDMO

Lab Ofichem is a full-service CDMO with special focus on APIs. As it is observed in the market, the ‘one-stop-shop’ style CDMO solutions are attracting more and more customers. Dedicated R&D teams at CDMO partners help their customers to efficiently develop the API production process, analytical validations and, when required, also process commercial batches. In some instances, the CDMO serves as a general consultant performing non-core functions, including preparation of documents for the client to submit to authorities. The choice which CDMO to work with, depends on factors such as the type of work, regulatory considerations, and scientific expertise to ensure accurate method development.

The CDMO sector and the players

The CDMO sector has a few dominant players, with the top players together controlling just under 25% of the market. There are now more than 500 CDMOs around the world. New research suggests that the CDMO market for API development will reach a value of $136.1 billion by 2028, at a forecasted compound annual growth rate of 6.7 percent between 2021 and 2028. The European CDMO market is forecasted to grow to almost USD 40 billion by 2030, up from a revenue of nearly USD 21 Billion in 2020. The repatriation of pharmaceutical manufacturing from Asia to Europe and the U.S. has led to an increased demand for CDMO in Europe. This trend is enhanced by the manufacturing inflation in the Far East and a desire for strategic pharmaceutical products to be manufactured closer to our markets. In addition, factors such as the growing prevalence of chronic diseases are anticipated to drive growth of the market as well.

Developing APIs and validating analyses is the pure type of co-creation work that is marked by long term partnerships.