The pharmaceutical industry is undergoing dramatic change. Pricing pressures, pipeline challenges, and emerging global markets are reshaping the way these companies operate. Providers to the pharmaceutical industry, such as contract manufacturers, will need to transform as well. In the year to come, contract manufacturers that differentiate their offerings and capabilities will be able to retain customers and grow their business within this highly competitive marketplace. Those that are able to adapt quickly, by taking advantage of the transformative nature of the industry, will position themselves as market leaders.

We will highlight four trends that are shaping the contract manufacturing industry, providing guidance on how companies can successfully navigate each.

In the year ahead, more contract manufacturing organizations (CMOs) will consider opportunities to provide services and support further “upstream” in the drug development process. With intensive margin pressures on the core business of commercial manufacturing and packaging, some CMOs are offsetting costs by offering more project based consulting and development activities. And where this has clearly worked for some of the larger CMOs, transforming them to what industry calls contract development and manufacturing organizations (CDMO), many companies have impaired their entry into this market by overleveraging their current offerings.

Saturated Market
The increase in the number of offshore contract manufacturing alternatives has left CMOs struggling to maintain profit margins and differentiate themselves in an already competitive marketplace. The market has become increasingly driven by price rather than value, making it incumbent upon CMOs to provide value outside of the traditional commercial manufacturing phase of the drug product lifecycle.

Research and Development Opportunities
Outsourcing early-stage analytical, formulation, and development activities has become a growing trend for the pharmaceutical industry. This shift offers CDMOs more opportunities to partner and offer services within the drug product lifecycle. However, to accomplish this, contract manufacturers need to evaluate their talent and capabilities. Cannibalizing people and assets from the core contract manufacturing business can lead to difficulties in both ventures.

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