Today, most biopharmaceutical developers use outsourcing services at some level. In fact, contract manufacturers and service providers are vital to many parts of the industry, especially in advanced technology segments like cell and gene therapy, where the manufacturing skills often do not exist among the innovator companies.

The percent of facilities doing all their bioprocessing in-house has declined steadily since 2006 from 57.6%, to only 29.7% in 2023, according to our 20th Annual Report and Survey of Biopharmaceutical Manufacturing¹ (see Figure 1). The fact that a large majority of the industry relies on contract development and manufacturing organizations (CDMOs) for various stages of their bioprocessing is a clear indication that outsourcing has become a mainstay of the industry. In fact, a sample of just how intertwined the CDMO outsourcing segment has become, some biologics innovators have stated they will avoid adopting new technologies, such as continuous bioprocessing, unless there are options to have these technologies transferred to a contract manufacturer at some point.  

CDMO revenue analysis in biomanufacturing

CDMO growth has been rapid, especially during the global COVID pandemic. To analyze their growth, we assessed the revenue of these industry giants over the past 11 years, from 2012 to 2022. We relied on publicly available resources, expert insights, financial disclosures, public presentations, and industry press releases to aggregate the data.

We researched data from our Top1000bio database of global facilities including quantitative data on in-use capacity for manufacturing mAbs, staffing related to biologics production, and the number of products manufactured annually in clinical and in commercial scale. However, to create a comparable analysis, we focus solely on revenue generated through mainstream biologics manufacturing. Because most of the biologics CDMOs provide services that may not be relevant to this analysis, the data we present are typically lower than revenues presented in the CDMOs’ annual reports or financial statements. This was done by assessing and subtracting the non-relevant business from the total revenues. While some CDMOs were able to provide this level of granular accounting, for some we used reliable estimates.

Included revenues:
•  Biopharmaceuticals, particularly cultured therapeutic and prophylactic biologics, including recombinant and non-recombinant proteins, monoclonal antibodies (mAbs), vaccines, etc.
•  Revenues from COVID-related activities, vaccines, and therapeutic production.

Excluded revenues:
•  Small molecule activities
•  Advanced therapies (cell and gene), non-recombinant vaccines
•  CRO activities
•  Dedicated fill-finish/contract drug product revenue
•  Blood/plasma-derived products, such as immunoglobulins; no synthetic peptide drugs
•  Products in preclinical stages
•  Stand-alone fill-finish operations, not associated with the CDMO’s biological production
•  Non-3rd party /“captive” CDMO Revenues (e.g., ABBVIE captive revenue portfolio)

From BioPlan Associates’ 2nd Annual 2023 Global Biologics Top Global CDMO Directory, Figure 2 shows the segment’s 11-year trajectory, and the significant evolution of CDMO revenue, especially during COVID. Noteworthy are the annual growth rates. Lonza, for instance, showed a 17% revenue upsurge in 2022, to $2,956 million for the relevant biological manufacturing. Not far behind, WuXi Biologics registered an impressive 32% growth, showing a revenue of $2,104 million.

COVID accelerated a fast-growing segment

The global CDMO segment has been growing rapidly in terms of revenue, numbers of suppliers, and overall market presence. Globally, CDMO businesses have been expanding. In China, for example, CDMOs were only recently permitted to operate on a national level—provincially they were only able to operate since 2016. WuXi Biologics has taken a big role—they now have the number two revenue spot globally, with a reasonable portion coming from COVID vaccines (see Table 1). Lonza’s estimated 11% of revenue coming from COVID activities is comparable to that of other major companies. Catalent’s biologics-related revenues during COVID were substantially boosted—50% of relevant biologics revenue were from COVID vaccines and therapies. 

Future casting: what lies beyond the horizon for contract biomanufacturing?

CDMOs have acquired a global footprint and are setting the stage for the next era of biomanufacturing. As they spearhead technological innovations they are often at the vanguard, charting the path forward. The 20th Annual Report shows the growth of outsourcing in biopharmaceuticals and highlight advances in areas such as cell and gene therapy. In these advanced therapy areas, many developers simply have no alternative than to outsource their manufacturing because the skills simply do not exist internally. As advanced therapies make it through the biologics R&D pipeline, they create increasing opportunities for skilled CDMOs capable of meeting their technical requirements. 

Outsourcing and offshoring

During the Pandemic, there was much discussion about onshoring—bringing manufacturing back to domestic shores to ensure capabilities and materials existed in the event of future catastrophes. Three years through the pandemic, the report’s projection into global sentiment regarding how the industry will be sending out bioprocessing to international destinations over the next five years is instructive.

Of the 37 countries considered “possible” outsourcing destinations for bioproduction outside the respondents’ country, the U.S. was mentioned most frequently by over 58% of respondents (see Figure 3). This is consistent with general trends since 2016. While there was a significant bump to 65% at the beginning of COVID in 2021, the trendline has returned to its prior shape.


Germany shows a similar growth pattern, with 47% noting it as a possible outsourcing destination in five years. China, in third, lost significant ground this year, to just under 31% of respondents—down from a high of 51% at the beginning of COVID. India has similarly lost ground as an biologics outsourcing destination since COVID. The dynamics point toward a possible recalibration in outsourcing by region.

Biopharmaceutical manufacturing: outsourcing as a pillar of progress

The 20th Annual Survey evaluated 26 different outsourcing categories and identified trends in the industry’s trajectory. Analytical testing, facility validation and cell line development services emerged as prominent areas of growth for outsourced activities. With projections suggesting an upward trend in the reliance on external expertise, the industry is geared towards efficiency, quality, and innovation.

Conclusions

The COVID Pandemic reshaped much of the global outsourcing landscape. While the U.S. and Germany retain a dominant stance, the emergence of countries like China, albeit driven primarily by WuXi Biologics, nonetheless shows an evolution indicative of Asia’s expanding role in biomanufacturing.

Multiple factors are driving the CDMO industry’s growth, and this has been the case since well before we started measuring their growth. The unprecedented demand for life-saving therapies includes emerging regions, and emerging technologies, so the likelihood of a slow-down in this growth is minimal. Despite a recent softening of demand as the industry recovers from the pandemic, CDMOs have nearly universally indicated that they remain optimistic about future growth in the segment.

Because an increasing number of decision-makers view outsourcing as a financial and strategic tool that allows prudent fiscal management, it allows for the optimized use of in-house resources. In the context of pandemics, contract manufacturing organizations (CMOs) have established themselves as vital to the segment by creating manufacturing flexibility for bioprocessing that is likely now seen as indispensable.

Post-COVID, the need for accurate and current information on bio-facilities capacity, growth and trends is even more necessary to support industry stakeholders in strategic manufacturing and planning. Further, given the dynamic nature of the industry, assessing areas of geographic growth and technical expansion is critical. We will continue to build resources such as the Top 1000 BioFacility Database (www.top1000bio.com) to provide analyses of biomanufacturing clusters and regions. Such metrics, like overall fixed capacity, offer stakeholders a compass in navigating their strategies.

References
1. 20th Annual Report of Biopharmaceutical Manufacturing Capacity and Demand, April 2023, BioPlan Associates, Inc. Rockville, MD 20850 www.bioplanassociates.com/20th
2. 2nd Annual 2023 Global Biologics Top Global CDMO Directory, www.bioplanassociates.com

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Doug Nissinoff is a Senior Research and Strategy Associate at BioPlan Associates, Inc. He is trained and educated in the biotech/pharma sector and holds an MS in biotechnology from Georgetown University. He works with BioPlan Associates, and serves as managing director of Intelligence Ventures, emphasizing investments in AI and healthcare. He has extensive experience in global executive consultancy, with a focus on international expansion and commercialization in the biotech, pharma, and medtech sectors.