The U.S. Contract Manufacturing Outsourcing Market Revives as Pharmaceutical Companies Increasingly Outsource After the Recession, Finds Frost & Sullivan

MOUNTAIN VIEW, CA /PRNewswire/ — The upturn in the fortunes of pharmaceutical companies after the recession is mirrored by the U.S. contract manufacturing outsourcing (CMO) market, which is expected to grow at a compound annual growth rate (CAGR) of 8.3 percent from 2011 to 2016. The sterile segment accounts for the highest share of revenues, with 38.7 percent in 2011, which is expected to rise to 47.5 percent by 2016.

New analysis from Frost & Sullivan’s (http://www.pharma.frost.com) Analysis of the United States Contract Manufacturing Outsourcing Market research finds that the market earned revenues of $10.73 billion in 2011 and estimates this to reach $15.97 billion in 2016.

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“The continued expansion of the U.S. pharmaceuticals industry and the big pharma’s increased outsourcing to improve cost structure and focus on core competencies will significantly augment the market’s revenue growth,” said Frost & Sullivan Consultant Jesse Sullivan. “The pharmaceutical companies that had used their excess capacity during the downturn to retain in-house manufacturing are expected to gradually outsource as the economy improves.”

Despite the inclination for pharmaceutical companies to outsource, R&D spending dipped from 2010 to 2011, resulting in fewer drugs being developed and marketed. As the CMO market’s revenue inflow is contingent on drug development, the torpid R&D activity has slowed the pace of market development.

The fragmented nature of the CMO services market has necessitated consolidation to improve profitability. Many CMO providers rely on a single client for more than 50.0 percent of their revenue. This tilts the balance of power in favor of the manufacturers and reduces prices across the industry.

“To demonstrate value to clients, CMO providers are likely to continue focusing on strategic relationships and promoting more services such as formulation improvements, alternate dose forms, real-time order tracking, and logistics support,” said Sullivan. “Further, numerous CMO providers are offering preclinical development services, which creates long-term relationships with manufacturers.”

Analysis of the United States Contract Manufacturing Outsourcing Market is part of the Life Sciences Growth Partnership Services program, which also includes research in the following markets: European Pharmaceutical and Biotech Contract Manufacturing Markets; Strategic Analysis of Contract Research and Manufacturing Services Market in India; U.S. Contract Research Outsourcing Market: Trends, Challenges and Competition in the New Decade; and Global CRO Market: Quantitative Assessment. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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Analysis of the United States Contract Manufacturing Outsourcing Market: NA74-52

SOURCE  Frost & Sullivan

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