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?

Without Sustainability in Your Vision, You Probably Will Fail

Torsten Wöhr: The CDMO market is very dynamic at the moment, and I think companies need to reflect this. Currently, most CDMOs that have invested in a specific platform like to stay with it. Especially in the peptide and oligonucleotide manufacturing business, one of the protectors of the niche is the capital you need to invest. There is a high entry barrier. I think this often provides a false sense of security. For example, we are currently an enabler in the market. You might think that is a comfortable position, but that should not be misunderstood as a position of strength. It is very important to stay humble. If there is huge demand not covered by supply, it is a matter of time until that gap is closed.

“Currently, most CDMOs that have invested
in a specific platform like to stay with it.”

So, I think you need to reinvest some of the money you make to stay at the forefront with research and innovation; this is our trailblazing concept. You start 3-4 different processes based on different technologies in parallel, and you decide at certain milestones which ones you are going to eliminate, and which one you carry forward. Not every CMDO does this, that they put their own money in these platform questions. But I think that is key, also when it comes to future challenges. We have customers that say: “We have a CO₂ emission target by 2035, and you are part of it!”
So, I believe if you do not have sustainability in your vision, you probably will fail. All CDMOs have to react there as well.