This article is based on Wechat Public No. ID: Firestone-link, by Zhou Zhou .
In recent years, the global pharmaceutical industry has developed rapidly. In the past, CMO with single output capacity is gradually transforming into CDMO with high value-added technology output. It is expected that the global CMO/CDMO market will reach 102.5 billion US dollars in 2021.
CMO provides pharmaceutical enterprises with technology development and formulation development support in the form of contract outsourcing. CMO provides customized manufacturing business such as clinical drug use, intermediate manufacturing, raw material drug production, preparation production and packaging according to the entrustment of pharmaceutical enterprises. Traditional heavy-capital CMO enterprises only provide OEM services for pharmaceutical enterprises. With the continuous improvement of pharmaceutical enterprises'requirements for drug production efficiency, CDMO enterprises with high-tech service export capabilities emerge as the times require. CDMO enterprises can use their own technology to optimize the whole R&D production process when providing production services for pharmaceutical enterprises. Instead of simply repeating the production process provided by the other side, CDMO enterprises can replace the single output of production capacity with high value-added technology output. In order to provide high-efficiency customized production services for pharmaceutical enterprises, it has two advantages: high-tech value-added process optimization capability and large-scale production capacity.
The division of labor between CRO and CMO enterprises in the new drug R&D industry chain is different: CRO enterprises focus on the development of R&D capabilities, and are technology-intensive pharmaceutical outsourcing enterprises; CMO/CDMO enterprises have higher access threshold, high technological skills and large asset scale are the necessary conditions for them to occupy the industry market, and they are technology-capital intensive pharmaceutical outsourcing enterprises.
The CMO/CDMO market is expanding and is expected to exceed $12.5 billion in 2021.
In order to find a high-efficiency and low-cost production mode, many multinational pharmaceutical companies have made strategic adjustments, focusing their internal resources on comparative advantages of industrial chain links such as pre-R&D, and seeking outsourcing services support from CMO/CDMO enterprises. In the future, the global CMO/CDMO market will grow more rapidly. It is estimated that the global CMO/CDMO market will exceed $12.5 billion in 2021, and the annual composite growth rate in 2017-2021 will be about 12.73%.
1.1 Risk Control Promotes Long-term Cooperation between Pharmaceutical Enterprises and CMO
Patent expiration and the emergence of generic drugs will impact the fluctuation of drug demand, and the long-term production planning will become increasingly challenging. The market of new drugs is unpredictable, and pharmaceutical enterprises are cautious about the construction of drug production capacity.
Lack of facilities and human resources, professional knowledge and skilled skills are the main reasons for the shortage of drugs in the current market. The establishment of cooperation between pharmaceutical enterprises and CMO can curb the shortage of drugs and meet the needs of consumers in a timely manner. Drug shortages occur when demand exceeds supply. According to data compiled by GrandView Research, 431 types of shortages of therapeutic drugs are common in the U.S. market between 2014 and 2017. CMO enterprises can provide pharmaceutical enterprises with process optimization, large-scale production and supply services in the stage of commercial production, and continuously produce drugs that meet international or national standards for global consumers, which has become a powerful backing for major pharmaceutical enterprises to concentrate resources and enhance their competitiveness in the fiercely competitive market.
1.2 The strong growth of biologicals market and the high complexity of production process have increased the demand for CMO of pharmaceutical enterprises.
Biologicals, including monoclonal antibodies, vaccines, gene therapy and cell therapy, can compensate for the limitations and deficiencies of chemotherapeutic drugs in a sense. The success of biological agents in clinical drug market has increased the demand of pharmaceutical enterprises for CMO enterprises. The urgent demand of pharmaceutical enterprises for the development services of biological agents is mainly attributed to the complexity of their production and manufacture. The slight change of any factor in the production process of biological agents may affect the safety and effectiveness of the final products.
The market size of biologicals increased by 70% between 2011 and 2016, reaching US$232 billion. There are 13 types of biologicals in TOP20 of the global drug sales list in 2017, and the market of biologicals will continue to grow strongly in the future.
1.3 High-tech barrier dosage forms become the mainstream, creating opportunities for high-tech value-added CMO/CDMO Enterprises
In the 1980s and 1990s, most drugs were formulated with tablets in gastrointestinal dosage forms. With the development of new technologies, the types of pharmaceutical preparations gradually diversified. Other types of preparations, such as capsules, solutions, injections, sprays and powder aerosols, have greater flexibility in the production process, and most pharmaceutical enterprises can not simultaneously have the infrastructure and capacity to produce a variety of dosage forms.
In terms of production mode, freeze-drying technology, solid coating of oral medicines and sustained-release capsules require pharmaceutical enterprises to have high automation and advanced production equipment; in terms of drug storage and packaging, such as blow-filling, three-in-one aseptic filling technology has very high requirements for both canned environment and machine facilities. CMO/CDMO enterprises with high technology added value can provide pharmaceutical enterprises with a series of professional services to meet the needs of pharmaceutical enterprises for different specialized production modes, thus saving the energy and cost of pharmaceutical enterprises in capacity building, and helping pharmaceutical enterprises to push products to the market at the fastest speed.
Policy is good, domestic CMO/CDMO industry has broad prospects
According to statistics from Southern Institute, the scale of CMO industry in China increased from 13.8 billion yuan to 27 billion yuan from 2012 to 2016, with an annual compound growth rate of 16.02%. It is expected that the domestic CMO industry will continue to grow at a high speed in the next five years, reaching 31.4 billion yuan in 2017 and 62.6 billion yuan in 2021, with an annual compound growth rate of 18.14%.
The favorable national policy, accelerated division of labor in the pharmaceutical industry market, R&D outsourcing CRO, production outsourcing CMO/CDMO and sales outsourcing CSO have formed three modes of pharmaceutical outsourcing. The CMO/CDMO industry has broad market prospects:
MAH system accelerates the division of labor in the pharmaceutical industry. Pharmaceutical Licensor (MAH) system refers to the management mode that separates the marketing licensing from the production licensing. Under this mechanism, the market license and production license are independent of each other, that is, scientific researchers, research institutes or innovative pharmaceutical enterprises can outsource the follow-up research and development, production and marketing of drugs on their own or after becoming the holders of the market license.
(2) The state will subsidize pharmaceutical outsourcing enterprises with certain scale and capacity. On June 11, 2018, the State Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology (MIIT), the State Health and Health Commission (NHSC) and the State Administration of Pharmaceutical Supervision (SADC) issued a circular on the "Special Project for Organizing and Implementing the Development and Production Service Platform for Biomedical Contracts". In order to promote the establishment and improvement of service system for superior enterprises, the state subsidy funds will account for about 30% of the total investment of the project (the specific requirements are as follows: CRO subdividing superior enterprises, the amount of R&D service contract in 2017 is over 200 million; CMO superior enterprises, the amount of production service contract in 2017 is over 300 million).