The COVID-19 pandemic has required herculean effort from global biopharma contract development and manufacturing organizations (CDMOs) over the past two years. The remarkable speed with which the industry has met the challenges is a testimony to its robustness and international character. Clearly, most global populations have benefited from the services these companies have provided. 

Despite this, some have debated the justifications for the revenue growth and profitability the segment has seen over the past two years. Revenues at these bioCDMO companies have increased for mainstream biologics, monoclonal antibodies, mAbs, vaccines and recombinant proteins, on average 29%. In fact, some have reported up to 40-80% revenue growth between 2020 and 2021. 

The “COVID bump” in revenue has been significant. But in relation to the pre-COVID baseline revenue and growth projections for the sub-segment, the estimated COVID contribution for the contract manufacturing of vaccines (excluding R&D, process development, vialing, etc.) of around $330 million in 2020 represented only 3% of total revenue. In 2021, that increased to $1.1 billion globally, representing around 9% of the total bioCDMO manufacturing revenue of $14.4 billion (Figure 1).

Pre-pandemic bioCDMO capacity challenges

The bioCDMO segment had been growing consistently and rapidly pre-COVID, as it filled the demand for new modalities, advanced therapies, biosimilars and geographic demand. COVID accelerated this growth and put capacity and human resource constraints onto an already-stressed segment that was near-capacity even before the pandemic.

But during Covid—the increase pushed the segment over the top. The fallout has been that even some CDMOs not engaged in COVID-related activities have seen increased business and revenue. This is because when COVID-related vaccine or therapeutic projects went to a larger CDMO, that work took priority, so non-COVID projects were displaced, and new ones were delayed. In some cases, these new or delayed projects cascaded to mid-size, or smaller CDMOs, which then filled their pipelines, as well. COVID has created rapid growth for many service providers, including those CDMOs with no relation to the vaccines industry. 

In fact, this cascade has affected not only service providers, but also their suppliers. Biopharma facilities are working hard to reduce their supply chain risk and ensure that they have the materials and consumables to keep manufacturing their biologics. This has resulted in warehousing and stockpiling materials to reduce the risk of shortages. Facilities are actively evaluating new suppliers to increase their options and avoid shortages. This includes CDMOs. Second and third-tier service suppliers are now seeing accelerated opportunities that before Covid would not have occurred.

bioCDMO 10-year industry growth

To evaluate the bioCDMO industry’s growth trends, we analyzed the global bioCDMOs in the industry as part of an on-going research effort, consulting with the Pharma & Biopharma Outsourcing Association (PBOA). Through this effort, we will continue to track bioCDMO industry data to improve its accuracy and methodology.

“The bioCDMO sector has played a pivotal role in helping developers bring vaccines, antibodies and therapeutics to the worldwide population,” said Gil Roth, president, PBOA. “It took an unprecedented degree of coordination to ramp up development and manufacturing, especially for a modality—mRNA — that had never been produced commercially before. We’re interested in seeing what the post-pandemic landscape will look like, especially as governments try to build robust domestic supplies for possible future pandemics. It’s one thing to predict where commercial demand will lead to bioCDMO investment, but government intervention may create other economic models or incentives for companies in this space.”

Revenue for this segment of the industry has grown from around $2 billion in 2012, to over $14 billion in 2021. This includes around $1.1 billion from COVID-related therapeutic and vaccine production activities.

There are over 300 bioCDMOs globally, with the Top 50 representing 80% of the capacity, and nearly 88% of the revenue. Many of the smaller facilities have grown recently as larger facilities undertake COVID production activities.

As shown in Figure 2, the global bioCDMO market is top-heavy, with 69% of the revenue coming from the top 8 companies. As noted, the top 50 companies make up nearly 88% of this $14.4 billion sub-segment. However, with a very large number of smaller service providers offering a very broad array of services from early R&D through fill-finish, the market represents a great diversity of expertise and services. These are located primarily in the U.S. and EU. China includes over 35 CDMOs, with WuXi’s rapid growth to the number 2 spot in terms of biologics contract revenue globally. The company’s stated 80% growth during COVID is reported to be organic, and represents mainstream, external-client mAb and vaccines revenue, exclusive of grants or government COVID-related projects.¹


The top bioCDMO facilities include Lonza, WuXi, Catalent, Samsung and Patheon (Figure 3). Mainstream mAb/Vaccine/Recombinant revenues from each of these companies exceeds $1 billion. We note that total company revenue may be larger than this, since we are excluding in our bioCDMO definition revenues from non-mainstream biologics. Further, these revenue source definitions can be challenging. Some bioCDMOs, including for Catalent and Patheon with around 20,000 and 60,000 liters capacity, respectively, may be including as much as approximately 20%-25% of their bioCDMO revenue from stand-alone fill-finish activities. Reclassifying that revenue, for example, would move these CDMOs to a lower position.

Defining “bioCDMO” Many different definitions can be used to assess industry growth. In this research, we consider the revenue from mainstream biologics CDMO services for mAbs, vaccines, recombinant therapeutics and related clinical and commercial activities only. We exclude revenues coming from small molecule services, R&D, contract fill-finish, or clinical services being done by the same bioCDMO. To create a consistent comparison, we also removed revenue from advanced therapies such as cell and gene therapy, and revenue from internal production of biologics (such as biosimilars) that may be sold directly by the CDMO. Also excluded are CRO, and stand-alone contract drug product (DP) or fill-finish for biologics; however, if related to CDMO drug substance manufacturing, we include this type of contract DP activity.   The information was collected from company annual reports, websites, press releases, public sources, input from industry observers and other primary data resources. This industry is rapidly growing, and the information may not fully reflect the current facility or company information. In some situations, the company found it challenging to accurately differentiate internal revenue sources. We made estimates based on capacity and productivity to develop an “apples-to-apples” comparison to ensure company, and aggregated industry revenue information are reasonably accurate.

COVID-related CDMO revenue

There are reportedly over 1,000 vaccines and therapies in development for Covid-19, and hundreds of contract manufacturing agreements. Over 120 CDMOs have Covid-19 contracts, meaning that Covid revenue is providing benefit to many. Some of the top CDMOs for bioprocessing (excluding fill-finish) include:

• Catalent (working with Johnson & Johnson, Moderna for F/F; AstraZeneca)
• Lonza (Moderna, AstraZeneca)
• Fujifilm Diosynth Biotechnologies (Novavax, Eli Lilly)
• Patheon/Thermo Fisher Scientific (Humanigen therapeutics)
• Samsung (vaccines and therapeutics)
• WuXi Biologics (vaccines and therapeutics)
• AGC Biologics (primarily vaccines for Pfizer, BioNTech, Novavax)
• Emergent BioSolutions (AstraZeneca, Johnson & Johnson, Novavax)
• The Serum Institute of India (AstraZeneca, Novavax, Gates Foundation, CEPI, Gavi)
• CSL (AstraZeneca, University of Queensland for vaccines, plasma therapies)
• Halix (AstraZeneca)
• IDT Biologika (Johnson & Johnson)
• Oxford Biomedica (AstraZeneca)
• Rentschler (Pfizer/BioNTech)
• Rovi (Moderna)

Determining the types and value of the contracts for Covid vaccine and therapeutic production, versus R&D, process development, fill-finish/vialing, etc., is difficult. However, the $1.1 billion in vaccine and therapeutic production contracts at the major facilities represents the bulk of the expenditures for actual manufacturing.

According to Dr. Michael Petersen, managing director and owner at Life Science Business Consulting, the dominant Covid vaccines utilize mRNA and viral vector technology, whose manufacture by CDMOs was only intended to supply clinical trials with low patient numbers. Accordingly, additional drug substance manufacturing needed to be put in place before the actual vaccine supply could start. On the final dosage form side, production capacity is typically less product-specific, and apart from adaptations for the cold storage and supply chain there was little investment required.

On the fill-finish side, Dr. Petersen said, “Fill line capacity tends to be more elastic to demand, and the output of existing lines has been dramatically increased by increasing batch sizes and longer effective production times. By using multi-dose vials, the demand was dialed down by a factor 5-10 compared to the actual bioprocessing [for APIs].”

Post-COVID revenue and capacity projections

Post-Covid, it is likely the CDMOs that have been directly involved with bioproduction will return to “business as usual.” This will include a return to normalcy, and relatively rapid growth, without the crisis-mode capacity challenges being faced today. Many industry observers have questioned how this will affect revenue, and whether the capacity expansions being experienced today will turn into idle capacity in the future.

Bioplan Associates projects that the industry’s <10% increase in revenue from contracts for Covid vaccines manufacturing have primarily been the result of increasing capacity by modifying and expanding existing facilities using more flexible single-use platforms, and by increasing staff workloads.

Thus, aside from dedicated mRNA production lines, post-Covid, the impact on CDMOs will often involve reduction in staff inputs, rather than in mothballing the relatively few dedicated facilities constructed for Covid purposes. This staff-allocation process will allow a relatively smooth transition post-Covid, as vaccine production normalizes. The end result will be that we are unlikely to see major problems with capacity being idled, or challenges with over-built capacity disrupting normal CDMO commerce.

“Large-scale dedicated mRNA production lines may be an exception to this pattern, as they were purpose-built,” said Mr. Petersen. “Even with further mRNA vaccines under development, the non-COVID demand is not expected to fully utilize this capacity, and some lines or even facilities may end up as a mothballed pandemic preparedness capacity reserve. Similar capacity reserves are being funded by different governments for several technologies in collaboration with some CDMOs. This is a relatively new phenomenon to the CDMO industry, since pandemic and seasonal products have traditionally been manufactured inhouse by large pharma companies. Apart from biodefence products, vaccines haven’t been manufactured by CDMOs typically.”

Revenue-wise, the underlying steady growth trend in the industry, where we have seen 12-15% growth over the past 10-15 years, is likely to continue. The Covid revenue bump will abate and we will return to normal CDMO growth. However, it is also likely that the trend we have seen over the past 19 years toward more outsourcing will have been accelerated.

In fact, from our 19th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production,² we find that the percentage has been declining annually over the past 19 years. From a high of 57.6% doing all their production in-house, we are now at around 35% of facilities doing all in-house (Figure 4). This shift toward external biopharma manufacturing (bioCDMOs) is likely to continue to increase over time. The Covid-related mAb therapeutics capacity demand is much smaller than the vaccines demand, so the impact on mainstream mAb production capacity will be minor. In addition, the emergency use authorization of the FDA for some of the mAbs was paused, due to unsatisfactory effectiveness against new COVID variants (omicron).

Conclusions and summary

COVID-19 supercharged an already upward trending bioCDMO segment. The long-term baseline growth pattern will likely persist. The post-pandemic era will provide opportunities for further growth, for those able to navigate the white-water. Smaller bioCDMOs may also benefit as COVID-era pipeline projects progress. Government investment or involvement in supply chains may lead to increases in capacity and “warm backup” contracts for some bioCDMOs. 

Although current pandemic revenue growth is not sustainable, the strong growth of the market outside of COVID, will continue. In terms of overcapacity due to COVID expansions, this will be a challenge only for highly specific, purpose-built large-scale assets like mRNA in-vitro transcription. But even this capacity is likely to be maintained for future pandemic preparedness.

As a result of the pandemic, more mainstream CDMOs have now gained access to the vaccines market, as more establish themselves at commercial vaccines scale. Time will tell whether government funding for local pandemic preparedness will result in longer term shifts in the market. 

References

1. https://www.bioplanassociates.com/china-cmo
2. 19th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, April 2022, BioPlan Associates, Inc. Rockville, MD www.bioplanassociates.com/19th

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Eric S. Langer is the President and Managing Partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in Rockville, MD in 1989. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing,” and many other industry reports. elanger@bioplanassociates.com, +1-301-921-5979, www.bioplanassociates.com.