CDMOs Driving Growth in the Pharma Sector

Pharma Tech Outlook: Pharma Tech Magazine

CDMOs Driving Growth in the Pharma Sector

Pharma Tech Outlook | Thursday, October 07, 2021

The CDMO industry experienced rapid expansion as the pharma industry started to develop solutions for Covid-19.

Fremont  CA: The contract development and manufacturing (CDMO) sector is in the best shape it's ever been. Government responses to the COVID-19 epidemic, particularly those aimed at maintaining economic activity, have benefited the industry significantly.

The biopharmaceutical sector and governments rushed to create medicines and vaccines to reduce the virus's damaging effects and, eventually, stop it from spreading. Much of CDMOs' current biomanufacturing and injectable capacity was set aside for the pandemic response, and financing was made available to support even more capacity expansion. Vaccines and therapeutics are only a small part of the possibilities opened up by the COVID-19 response. CDMOs have benefited from macroeconomic initiatives to preserve economic activity and avoid business bankruptcies in addition to those actively involved in the pandemic response.

The amount of new money poured into biopharmaceutical businesses has been astounding. Biopharma businesses are expected to raise $88 billion in new stock in 2020, according to statistics provided by investment company Jefferies, which includes venture capital, initial public offers (IPOs), and secondary sales by already-public companies. That's a whopping 76 percent raise over the previous year's total. Much of the additional money went to small biotechs and will be funneled to CDMOs and clinical contract research organizations (CROs) to help them develop the candidates in their pipelines.

The massive investments are unmistakably a response to the increased demand created by the unprecedented fundraising activity. With so much cash on biopharmaceutical companies' balance sheets, a key source of uncertainty has been removed, and CDMOs look confident in moving forward with investments rather than waiting for more proof of demand.

Companies in the CDMO industry are currently generating higher revenue than ever before. The industry, on the other hand, is far from being completely mature. The industry may expect ongoing rapid expansion due to the explosion of the drug-development pipeline, record funding of nascent biopharma businesses, and massive new potentials such as gene and cell therapies.

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