According to a GEN article (July, Vol 31, No. 13, page 40), CMOs are guardedly optimistic that the segment has overcome the recent economic downturn and will be poised to grow in double-digits in the at least the near term. Many have recently added capacity and are now turning their attention to create added flexibility for their clients, often using single-use disposable systems to accomplish the task. CMOs are also enhancing their offers in the their service portfolio.
Lonza, KBI BioPharma, Wacker Biotech, Boehringer Ingelheim, CMC Biologics, Cytovance and DSM are among those CMOs who have added recent capacity -- incorporating more use of disposables, raising their ability to meet regulatory requirements and increasing downstream capabilities.
Despite the lack of availability of venture capital to their small and mid-size clients -- which has hurt business -- CMOs see more trends in the positive direction that give them optimism that they will see double-digit growth in 2011. They say more companies are focused on advancing candidates in their pipelines rather than broadening them which should lead to more late stage projects in CMOs. Also, Big Pharma is beginning to divest manufacturing capacity in favor of outsourcing it to CMOs as a strategy. And, biosimilars and biobetters are coming on the scene to provide more projects and volume. Finally, the biotech is going global which brings more customers in from Asia Pacific and other emerging markets.
There remain some concerns. A few CMOs mentioned the possiblility of over-capacity in the industry once again as CMO capacity is also coming on in Asia and emerging markets leading to more competition. That's certainly a trend that I'm seeing in my work -- primarily as a consequence of more biosimilar and biobetter companies emerging in those regions. So as many of the trends may be positive as compared to a the past few years, it still looks like a very competitive marketplace and companies will have to continue to differentiate their service offerings to maintain good margins and flow of business.
Posted by Bruce Lehr July 5th 2011.