Drug companies to increase outsourcing budgets

An aging population, an increase of chronic diseases, and a growing demand for biologic are some of the factors driving the pharmaceutical contract manufacturing market. “Strategies of drug manufacturers, as well as contract manufacturing organisations (CMOs) are driving market growth. Drug manufacturers are increasing their outsourcing budgets and CMOs are developing capabilities and expanding their capacity to meet client needs,” said BCC Research in its new report.
 
The report analyses four segments of the global contract pharmaceutical market: over-the-counter (OTC) and nutraceuticals, bulk and dosage form drugs, research, and packaging. In 2014, the global revenue for contract research, the fastest growing segment, totaled $42 billion. From a predicted five-year compound annual growth (CAGR) of 11.5%, this segment should reach $72 billion in 2019. North America and Europe are the leading markets for contract research.
 
The largest segment of the overall market, OTC and nutraceuticals, totaled $138.7 billion in 2014 and should reach $192.3 billion in 2019, reflecting a CAGR of 6.8%. Factors driving market growth include the trend towards self-medication and a growing geriatric population.
 
In recent years, many organisations have taken advantage of contract manufacturing, contract research and contract packaging. The companies involved in the contract process have benefited from the alliance as it provides the manufacturing/research/packaging company with financial stability for the duration of the contract, while the hiring company benefits by saving costs and eliminating the stresses related to operating and managing a production facility and related research.
 
“Pharmaceutical outsourcing has become a viable business strategy that is enabling pharmaceutical firms to transfer non-core activities to external CMO partners in order to restructure their distribution networks, leverage resources, spread out risk, focus on issues imperative to survival, achieve competitive advantage and assures future growth,” Shalini Dewan, analyst, BCC Research.