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?

CDMOs Must Have a Clear Vision and Strategic Growth Plan

Neil Jones: The importance of contract development and manufacturing organizations (CDMOs) in the global pharmaceutical supply chain is growing rapidly. As the demand for new and innovative therapies increases, both well-established pharmaceutical companies and emerging biopharma companies are turning to CDMOs for strategic partnerships. These partnerships enhance the drug development and manufacturing process by making it faster, more efficient, flexible, and timely. The significance of CDMOs is evident in the market growth, which reached €206 billion in 2023 and is expected to expand to €293 billion by 2028, with a CAGR of over 7%.

To further grow our market share in this industry, we focus on three simple key aspects:
First, vision and strategy: A CDMO must have a clear vision and strategic growth plan. This involves investing in production capacity for rapid scalability and faster time-to-market, as well as being an innovative and flexible partner. CDMOs need to anticipate and support future customer needs with the latest technologies, such as improving the bioavailability of APIs or accelerating the time-to-market for new chemical entities (NCEs).

“Both well-established pharmaceutical companies and emerging biopharma companies
are turning to CDMOs for strategic partnerships.”

Second, customer-centric approach: Placing the customer — and consequently the patient — at the center of all activities is crucial. CDMOs have a significant responsibility in the development and manufacture of products that improve the health and well-being of people worldwide. This requires operational excellence to ensure the highest quality and reliable delivery every day. Additionally, it involves a collaborative mindset to address business challenges alongside customers through continuous communication.

Finally, prioritization and execution: Recognizing market position and setting clear priorities is essential for CDMOs. For Aenova, this means strengthening our presence by expanding growth platforms, enhancing operational excellence, and developing growth drivers, including extending development services and technologies for innovative medicines.