Contract development and manufacturing organizations (CDMOs) have been on the rise in the last decade. Historically, CDMOs operated on a business model which predominantly focused on serving as external service providers for manufacturing pharmaceuticals. This model included the addition of capacity by the acquisition of manufacturing facilities from (bio)pharma companies or own capital investments. However, CDMOs have increasingly become innovation leaders and cover more areas of the pharma business, not just manufacturing, opening up additional revenue streams.

This change of focus has been accompanied by a change in the M&A landscape in the market. Some CDMOs are expanding their services and swapping their “contracts” for “partnerships”, evolving the term “CDMO” into “PDMO.” By getting closer to their partners, CDMOs can move past some of the pressure and offer consultative support or innovation to develop products in new ways.
The evolution of the CDMO sector is propelled by rising manufacturing standards, the advent of groundbreaking therapies, and a shift towards personalized medicine.

CHEManager asked executives and industry experts from a broad range of CDMOs to share their views on how their companies are dealing with this changing economic environment and the resulting opportunities and challenges. We proposed to discuss the following aspects:

• (How) have the rules of the CDMO market changed since the pandemic of 2020/21?
• What do you consider the most important growth drivers for CDMOs?
• What is your company’s strategy to grow the market share in the CDMO industry?

Focus on Being in Close Contact with Partners

Frank Wegener: Actually, the rules have changed somehow. There has been a period up to the end of 2022, where customers have been very conscious about potential supply chain disruptions, focusing their operations on Europe or the US. This gave a push to all CDMOs. The consolidation of European CDMOs moved forward, especially on the back of rising energy prices and labor costs, the positive tailwind only lasted a short period of time. All companies, around the globe, are in the meantime considerably more digital and big parts of the work with the customer is done online.
Technical excellence, best-in-class service, agility. What does this mean: The growth is driven via the willingness of the big players to allocate projects to a CDMO. We therefore focus on being in close contact with our partners and trying to understand their most important needs for the specific project, which can vary a lot. It might be a fast implementation, an improvement of the process, flexibility in campaign volumes, … .

“Growth is driven via the willingness of the big players
to allocate projects to a CDMO.”

To focus on our core competences and further improve them in all areas of working together with our partners. We as ESIM are known for best-in-class operational excellence to further improve the processes and therefore the cost situation, on for example raw material usage, for our customers. Keeping the focus on further educating our workforce in operational excellence and best practice of project management. Together with a clear strategy, being one of only a few companies fully focusing on CDMO without a big line product business next to it, this will bring the tailwind for growing further the market share in the rather small world of CDMO industry.