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Rising Interest of Big Pharma Creates Immense Growth Potential for Contract Manufacturing Organisations Says Frost & Sullivan - Technical expertise, potential for time and cost savings underlines viability of contract outsourcing - Pharma.Frost.com
Rising Interest of Big Pharma Creates Immense Growth Potential for Contract Manufacturing Organisations Says Frost & Sullivan

 

NewswireToday - /newswire/ - London, United Kingdom, 2012/01/23 - Technical expertise, potential for time and cost savings underlines viability of contract outsourcing - Pharma.Frost.com.

   
 
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Increasingly, big pharma is viewing the outsourcing of pharmaceutical manufacturing as a strategic move that would enable them to focus on their core competencies such as R&D. At the same time, the patent expiry of key blockbuster drugs worth $45 billion and biologics worth $30 billion is expected to reduce the capacity utilisation rates of their manufacturing facilities, thereby making outsourcing a viable option for pharmaceutical and biotech companies.

New analysis from Frost & Sullivan (pharma.frost.com), European Pharmaceutical and Biotech Contract Manufacturing Markets, finds that the European pharmaceutical contract manufacturing market earned revenues of $10.02 billion in 2011 and estimates this to reach $20.75 billion in 2018. Over the same period, the European biotech contract manufacturing market is set to expand from $1.21 billion to an estimated $2.67 billion.

"As pharmaceutical and biotech companies strive to enhance their internal core competencies, outsourcing is likely to become increasingly entrenched as a strategic manufacturing option," notes Frost & Sullivan Research Analyst Aiswariya Chidambaram. "The impact of the economic crisis, coupled with the poor performance of the venture capital industry in Europe, has underlined the popularity of contract manufacturing as it has become synonymous with cost-cutting and the timely entry of products into the market."

In parallel, with several blockbuster drugs of large pharma and biotech companies coming off-patent, the utilisation rates of manufacturing plants are likely to reduce by half. This is set to trigger an increase in outsourcing of manufacturing by big pharma companies. Currently, big pharma companies contribute between 10 to 25 per cent of the total revenues of contract manufacturing organisations (CMOs) in Europe. Frost & Sullivan anticipates such figures to rise to 40.0 per cent by 2013, and up to 50.0 per cent by 2018.

However, stringent regulatory requirements are likely to place pressure on CMOs.

As the regulatory environment in Europe becomes progressively stricter owing to contamination issues, safety compliance and drug recalls, the costs of gaining regulatory approvals will make up a major chunk of fixed costs for CMOs.

Despite this challenge, market prospects are extremely buoyant. Frost & Sullivan projects the European pharmaceutical contract manufacturing market to grow at a compound annual growth rate (CAGR) of 10.9% from 2011-2018, with its biotech counterpart poised to register a compound annual growth rate of 12.1% over the same time frame.

"Although the demand for manufacturing capacity is rising, a careful weighing of benefits and risks is required by CMOs while planning capacity expansions lest they be hit by over capacity, which, in turn, could lead to the acquisition of smaller CMOs by larger ones," cautions Aiswariya. "Promisingly, there is tremendous untapped potential for CMOs which are properly positioned and at the forefront of technology in the capital-intensive and technology-driven contract manufacturing market."

If you are interested in more information on this study, please send an email with your contact details to Janique Morvan, Corporate Communications, at janique.morvan[.]frost.com.

European Pharmaceutical and Biotech Contract Manufacturing Markets is part of the Pharmaceuticals & Biotechnology Growth Partnership Service programme, which also includes research in the following markets: European Biosimilars Market and Generic Pharmaceuticals Market – A Global Analysis. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

About Frost & Sullivan
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.

European Pharmaceutical and Biotech Contract Manufacturing Markets / M78C-52

 
 
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Rising Interest of Big Pharma Creates Immense Growth Potential for Contract Manufacturing Organisations Says Frost & Sullivan

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Frost & Sullivan |
Publisher Contact: Janique Morvan - Frost.com 
+33(0)1 42 81 20 37 janique.morvan[.]frost.com
 
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