Pharmaceutical Contract Manufacturing Market Trends [2031]

Report Description

Pharmaceutical Contract Manufacturing Market Outlook 2031

The global pharmaceutical contract manufacturing market size was USD 119.24 Billion in 2022 and is likely to reach USD 199.75 Billion by 2031, expanding at a CAGR of 5.9% during 2023–2031. The market growth is attributed to the increasing demand for generic drugs.

Increasing demand for generic drugs is expected to boost the demand for pharmaceutical contract manufacturing. Big pharma manufacturers are contracting other medical firms to produce generic drugs, as it helps them to save their production costs, which enhances the demand for pharmaceutical contract manufacturing. Therefore, the rising adoption of generic drugs is propelling the market. For instance, generic drug sales are expected to reach approximately USD 100 billion by 2026.

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Pharmaceutical contract manufacturing is a process where a pharma or MedTech company outsources another medical company to manufacture or produce medical drugs or medicines, such as pills, tablets, and capsules, for the firm.

Active Pharmaceutical ingredient manufacturing (API) and finished dosage formulation (FDF) are two types of pharmaceutical contract manufacturing. Pharmaceutical contract manufacturing is majorly deployed by big pharma, small and mid-size pharma, and generic pharmaceutical companies.

The COVID-19 pandemic propelled the demand for pharmaceutical contract manufacturing. COVID-19 infection directly affects the respiratory system and blood sugar level of COVID-19 patients, which enhances the demand for several drugs such as remdesivir, molnupiravir, and ritonavir.

This increases the outsourcing activities for manufacturing COVID-19 treatment drugs through companies engaged in contract manufacturing, which enhances the demand for pharmaceutical contract manufacturing. For instance,

• On August 7, 2020, Pfizer Inc., a US-based pharmaceutical and biotechnology company, announced a multi-year agreement with Gilead Sciences, Inc. to manufacture and supply Gilead’s investigational antiviral remdesivir, under the terms that Pfizer provides contract manufacturing services at Pfizer’s McPherson, Kansas facility to manufacture and supply remdesivir for Gilead.

Impact of Artificial Intelligence (AI) on Pharmaceutical Contract Manufacturing

Technological advancements in healthcare and the introduction of artificial intelligence are expected to create lucrative opportunities in the market. AI in pharmaceutical contract manufacturing plays a significant role in monitoring and maintaining equipment, identifying areas for continuous improvement, and characterizing raw materials.

AI in pharmaceutical contract manufacturing ensures adherence to complex regulations and streamlines the regulatory submission process, as it assists in reviewing documentation and identifying gaps or non-compliance issues.

Pharmaceutical Contract Manufacturing Market Dynamics

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Major drivers

Rising need for biological treatment is expected to boost the demand for pharmaceutical contract manufacturing. Biological treatment requires advanced technologies to develop and manufacture biological drugs efficiently and cost-effectively, which is anticipated to enhance the demand for pharmaceutical contract manufacturing.

Increasing incidence of chronic diseases is projected to drive the market. Chronic diseases require regular monitoring to check the progress or regress of the disease. Chronic diseases need several drugs or medicines to prevent, diagnose, treat, and rehabilitate illnesses and diseases safely and effectively.

Pharmaceutical contract manufacturing aids in developing drugs and medicines for the treatment of chronic diseases at affordable prices, which increases their adoption in chronic disease management. For instance,

• As per a report published by the World Health Organization on September 16, 2023, 41 million people are killed every year globally, due to chronic diseases, which is equivalent to 74% of all deaths globally.

Existing Restraints

Complexities involved with pharmaceutical contract manufacturing are expected to restrict the market. Pharmaceutical contract manufacturing is a complex procedure, as it requires thorough knowledge of the manufacturing capabilities of contract manufacturers. Moreover, the risk of leakage of confidential information associated with pharmaceutical contract manufacturing is projected to hamper the market.

Emerging Opportunities

Increasing spending by key market players to construct manufacturing facilities for small molecule drugs and active pharmaceutical ingredients is expected to create opportunities in the market.

For instance, on March 22, 2023, Sumitomo Chemical Co., Ltd. a Japan-based contract development and manufacturing organization announced the construction of a manufacturing plant for active pharmaceutical ingredients and intermediates for small-molecule drugs.

Scope of the Pharmaceutical Contract Manufacturing Market Report

The report on the market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Pharmaceutical Contract Manufacturing Market Segment Insights

Type Segment Analysis

Based on type, the pharmaceutical contract manufacturing market is bifurcated into active pharmaceutical ingredient manufacturing (API) and finished dosage formulation (FDF). The active pharmaceutical ingredient manufacturing (API) segment dominated the market in 2022 and is projected to continue its dominance throughout the projection period, due to rising chronic diseases such as cardiovascular disorders, cancer, and diabetes.

Active pharmaceutical ingredients are vital in a pharmaceutical drug that produces the required effect on the body to treat a condition. Moreover, technological advancements and innovations in API manufacturing are enhancing the demand for active pharmaceutical ingredients.

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End-user Segment Analysis

In terms of end-user, the pharmaceutical contract manufacturing market is categorized into big pharma and small and mid-size pharma. The big pharma segment held a large share of the market, due to its ability to provide essential healthcare products at affordable prices.

Production of medicine and drugs requires a lot of investment, manpower, skilled labor, and others, which encourages big pharma companies to adopt contract manufacturing to produce medicines, as it helps them to save costs.

The small and mid-size pharma segment is anticipated to grow at a quick pace in the coming years, owing to the growing demand for generic drugs. Small and mid-size pharma companies utilize pharmaceutical contract manufacturing, as it helps them expand their manufacturing workforce and production capacity effectively without taking the complete risk and responsibility of manufacturing in their facility.

Regional Outlook

Based on region, the pharmaceutical contract manufacturing market is segregated into Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America accounted for a major share of the market in 2022, due to increasing healthcare spending and the presence of key market players such as Thermo Fisher Scientific Inc., Catalent, Inc., and AbbVie Inc.

Moreover, companies in the region are receiving contracts for manufacturing essential medicines including medicines to combat the COVID-19 pandemic, which is estimated to propel the market. For instance,

• On May 19, 2020, Phlow Corp, a pharmaceutical manufacturing company, received federal government funding of USD 354 million for advanced manufacturing of essential medicines at risk of shortage, including medicines to combat the COVID-19 pandemic.

The market in Asia Pacific is projected to expand at a high CAGR during the forecast period, owing to increasing geriatric population, rising awareness regarding pharmaceutical contract manufacturing, and growing medical tourism. Moreover, increasing investment by the government in pharma-MedTech is expected to boost the demand for pharmaceutical contract manufacturing. For instance,

• On September 26, 2023, Dr. Mansukh Mandaviya, Union Minister of Chemicals and Fertilizers and Minister of Health & Family Welfare of the Government of India, launched a Rs 5K crore R&D scheme for pharma Medtech. The scheme focuses on transforming India into a high-volume, high-value player in the global pharmaceuticals market, meeting the quality, accessibility, and affordability goals.

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