Under the trend of innovative R&D, competition in the pharmaceutical industry is becoming increasingly fierce. The division of labor within the pharmaceutical industry chain is gradually becoming specialized, refined, and customized. CDMOs leverage their technical advantages and production capabilities to assist pharmaceutical companies in achieving everything from concept to product, from process development to large-scale production. Entrusting CDMO enterprises has become an important path for innovative R&D and production. Both start-up pharmaceutical companies and large pharmaceutical enterprises can benefit from the high-quality services provided by CDMOs. CDMOs also continuously optimize their technical platforms, expand business scope, and extend the industry chain in response to the ever-changing pharmaceutical market to meet the actual needs of different types of customers.
On September 28th, Mr. Li Dongyi, Director of Healthcare Consulting at Frost & Sullivan (referred to as 'Frost & Sullivan'), officially released the 'Research Report on the Current Development and Future Trends of the CDMO Industry' (hereinafter referred to as the 'Report') at the 16th Frost & Sullivan Global GIL Summit · Biotech Investment Sub-forum.
Mr. Li Dongyi, Director of Healthcare Consulting at Frost & Sullivan
Release Ceremony of "Research Report on the Current Development Situation and Future Trends of the CDMO Industry"
Kang Long Huacheng Securities' General Supervising Officer Yang (left), Dongyao Pharmaceutical's Financial Director Xiao Ben (middle), and Wang Manchao, Founder Partner, Director and General Manager of Yaohai Biotechnology (right).
The report conducts an in-depth analysis of China's CDMO industry, exploring the industry value from various aspects such as industry overview, capital enthusiasm, and competitive landscape. It investigates the driving forces behind industry development and tracks the iterative context of production technology. While focusing on the overall operational situation of the CDMO industry, the report also concentrates on the current development status of each sub-field within CDMO.
1
Overview of the CDMO Industry
01
Introduction to CDMO
CDMO evolved from and iteratively upgraded from CMO services. With the increasingly fierce competition among pharmaceutical companies, traditional CMO enterprises' simple contract manufacturing production can no longer meet the needs of pharmaceutical companies for cost reduction and efficiency improvement. On this basis, CDMO enterprises that can utilize their own production equipment and technical advantages to help pharmaceutical companies optimize production processes and carry out customized large-scale production have emerged. The CDMO industry has been continuously developing since its inception and has now entered a stable development phase.
Data source: Analysis by Frost & Sullivan
02
CDMO service scope
CDMO provides R&D services with technical added value and capacity support, covering all stages of R&D. The service scope built by CDMO companies for pharmaceutical enterprises includes CMC services in preclinical and clinical stages, process development and production of active pharmaceutical ingredients (APIs), intermediates, and formulations, as well as packaging services. During the drug R&D phase, CDMO can improve efficiency and reduce costs; during the commercialization phase, CDMO can continuously optimize processes to lower production costs, increase production efficiency, while ensuring product quality and supply stability.
Data source: Analysis by Frost & Sullivan
03
CDMO sub-sectors
According to the type of drug, current CDMO sub-sectors can be mainly divided into three categories: small molecule CDMO, large molecule CDMO (including peptides/antibodies/proteins/vaccines, etc.), and cell and gene therapy (CGT) CDMO. Small molecule drugs have a simple structure and strong deconstructibility of chemical synthesis steps, and most compounds are characterized by high stability and convenient transport. Therefore, small molecule CDMO products have standardized processes following the product preparation path of 'basic chemicals - non-GMP intermediates - GMP intermediates - bulk drugs - formulations', making the production process easy for industrialization. Compared with small molecule chemical drugs, large molecule biologics have a more complex structure, higher development costs, and greater production/imitation difficulties. Leading large molecule CDMO companies occupy a higher market share due to their technological and capacity advantages. The production processes of cell and gene therapy are complex and subject to high technical barriers, and they are currently in the early stages of development. However, their global pipeline for research and development is rapidly growing, and the CDMO industry, which relies on the trends in the CGT industry, has also developed rapidly.
Data source: Analysis by Frost & Sullivan
04
CDMO industry chain and service advantages
The upstream of the CDMO industry consists of fine chemical enterprises responsible for providing basic chemical raw materials, which can be processed into specialized pharmaceutical raw materials through classified processing. The preparation of active pharmaceutical ingredients (APIs) is the foundation of drug research and development. Its main purpose is to provide qualified APIs for pharmacological toxicology, formulation, clinical research, etc., during the drug R&D process, to provide information for quality studies, and to ensure the stability and feasibility of production processes. CDMO enterprises verify the quality of raw materials and process specialized pharmaceutical raw materials into starting materials, intermediates, APIs, and formulations to supply downstream pharmaceutical companies, biotech companies, academic research institutions, etc.
Data source: Analysis by Frost & Sullivan
The Report elaborates on how the CDMO industry, as an important participant in pharmaceutical R&D and production, can empower pharmaceutical companies from the following four aspects: assisting in R&D and production, reducing corporate costs, improving service efficiency, and promoting technological iteration.
Data source: Analysis by Frost & Sullivan
2
Market scale and development trend of the CDMO industry
01
Global and China's CDMO Industry Market Size Analysis
The Report estimates the global and China's CDMO market size.From a global perspective, the CDMO industry is in a trend of continuous growth and expansion, maintaining a high market prosperity. From 2017 to 2021, the global CDMO market size increased from $39.4 billion to $632 billion, with a compound annual growth rate of 12.5%. It is expected that by 2025, the market size will reach $124.3 billion and by 2030, it will reach $231 billion.
Data source: Analysis by Frost & Sullivan
CDMO plays an important role in the drug innovation industry chain. With the rapid development of China's innovative drug R&D business model, the CDMO industry has shown strong momentum and has experienced rapid growth in recent years. From 2017 to 2021, the market scale of Chinese CDMOs increased from 132 billion yuan to 473 billion yuan, with a compound annual growth rate of 37.7%. It is expected that by 2025, it will reach 1571 billion yuan and by 2030, it will reach 3559 billion yuan. China's CDMO industry shows rapid growth above global levels, and its market share in the global market has been increasing year by year. In 2017, the Chinese CDMO market accounted for only 5.0% of the total global CDMO market scale, but by 2021, it had expanded to 13.2%, and it is expected to account for one-fifth of the global market after 2025.
Data source: Analysis by Frost & Sullivan
02
Analysis of the Drivers of China's CDMO Market
The Report will delve into the driving forces behind the development of the CDMO industry from four core perspectives: pharmaceutical R&D investment, industry policy dividends, talent and cost advantages, and technological platform innovation.
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Medical R&D Investment
In recent years, China's pharmaceutical R&D investment has shown a steady growth trend, increasing from $14.3 billion in 2017 to $29 billion. The continuous increase in R&D expenditure provides more active and abundant financial resources for innovative drug research and development. Benefiting from the overall prosperity of the pharmaceutical market and the enthusiasm for innovative drug research and development, the CDMO market will further expand in the future.
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Industry policy dividends
The promulgation of a series of pharmaceutical industry policies and the implementation of systems have created opportunities for the development of the CDMO industry. The implementation of policies such as the Medicines Administration Holder (MAH) system, the reform of new drug review and approval systems, volume-based procurement, and medical insurance negotiations has created a favorable environment for the development of China's CDMO industry.
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Talent and cost advantages
CDMO is a technology-intensive industry that requires a large number of professional technical talents for drug development and process optimization. China's CDMO industry possesses considerable human resources and significant cost advantages, which can meet the cost control needs of pharmaceutical companies when choosing outsourcing services for production. To some extent, this ensures the growth potential of China's CDMO industry.
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Technological platform innovation
The CDMO industry has taken on the process development and production functions of pharmaceutical companies. Compared with CDMO companies that mainly focus on single-output capacity, CDMO companies place more emphasis on the innovation capability of production processes during the R&D phase. Participants in the industry are also continuously upgrading their industries by innovating technology platforms and R&D capabilities, providing more diversified services.
03
Analysis of the Development Trend of China's CDMO Market
Based on the current market situation and overall trends,The Report makes a prospect outlook on the future development trend of the CDMO industry from three important dimensions:
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By integrating horizontally, expanding production capacity, accumulating customer resources, and accelerating the pace of globalization expansion
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Expand business scope through multiple paths, build a complete industrial service chain, and construct a one-stop service platform
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Business and service models are constantly innovating to create distinctive and differentiated advantages.
3
Sub-sectors of the CDMO industry
01
Segmented Areas - CDMO for Small Molecule Drugs
Modern drug research and development began with chemical drugs, which have matured in technology and progressed rapidly in the process of transforming scientific research achievements into practical applications. Although emerging fields such as biopharmaceuticals and cell and gene therapies have developed rapidly in recent years, chemical drugs remain the mainstream form of medication.
Data source: Analysis by Frost & Sullivan
With the in-depth research into disease mechanisms, drug development has gradually entered an era of precision therapy targeting specific targets. Correspondingly, there have been significant changes in the nature of new drugs: drugs now have more accurate and selective targeted effects, with an increase in highly active drug components; drug molecular weights have significantly increased and structures have become more complex; water solubility and permeability of drugs have decreased. A series of changes in the properties of new chemical drugs also require corresponding emerging synthesis and formulation technologies to keep up.
In addition, the increased difficulty in exploring and discovering new molecular entity drugs has led to higher R&D costs for new drugs. There are more risk factors, market competition is becoming fierce, and drug R&D has thus entered an era of pharmaceutical formulation innovation. The research and production of new high-end complex formulations also pose new challenges to chemical pharmaceutical processes. The small molecule CDMO industry has also built a series of advanced process technology platforms along with these new drug molecules, expanding its service capabilities from laboratory to laboratory.
The 'Report' subsequently summarizes the service scope and main service advantages of small molecule CDMOs, by exemplifying a series of technologies and equipment that CDMO companies can provide in the R&D and production process, further demonstrating the comprehensive service capabilities of small molecule CDMOs. In addition, the 'Report' includes an analysis of the development of the global and Chinese small molecule CDMO market scale in recent years, as well as predictions for future growth space trends.
02
Segmented Areas - Peptide Drug CDMO
The advantages of peptide drugs over small molecule and protein-based drugs have been gradually discovered during their development. They are close to the quality control level of small molecule drugs and their activity is similar to that of protein drugs, combining both benefits. Due to the high activity and selectivity of peptide drugs, they have an obvious advantage in treating complex diseases.
Data source: Analysis by Frost & Sullivan
Due to their biological activity and unique advantages, the research on peptide pharmaceutical processes has become a hot topic in current peptide studies. While synthesis and separation purification technologies are continuously evolving, there are still high barriers to large-scale production.The Report elaborates in detail on the technical barriers faced by peptide drugs during large-scale commercial production from two processes: synthesis and separation purification. It summarizes the service scope that a peptide CDMO, as a third-party service provider, can offer and its main service advantages. In addition, the Report analyzes and predicts the market size of peptide CDMOs.
03
Segmentation - CGT CDMO
Cell gene therapy (CGT) has become a new generation of breakthrough precision treatment methods due to its significant therapeutic advantages, and related clinical translation and commercialization are accelerating. As of now, the US FDA has approved a total of 25 CGT products, including more than 10 products modified with viral vectors. The growth in the number of marketed products will rapidly expand the CGT market scale and accelerate the pace of CGT therapies from research and development to commercial production.
At the same time, as a hot research and development area, the rapid expansion of the R&D pipeline has generated huge demand for R&D and production. With the increasingly clear regulatory system, gradually increasing investment in R&D, and the overall booming development of innovative industries, more CGT products will enter the clinical research and development stage in China in the future.
Data source: Analysis by Frost & Sullivan
The commercial development of CGT products requires large-scale production and sustainable supply. Taking the production process of CAR-T cell products, which is currently undergoing rapid commercialization, as an example, the Report analyzes in depth the main reasons limiting their feasibility:
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The production process and technology are complex, and the dilemma of insufficient capacity urgently needs to be resolved.
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The production cost of drug research and development is high, and R&D enterprises have a strong willingness to reduce costs.
The production process of CGT products involves three relatively independent technological segments: plasmid technology, viral vector technology, and cell technology.The Report summarizes the key difficulties and technological breakthroughs in each production link, tracking the future technological development direction of the CGT field.The service advantages provided by CDMO services are evident in the R&D and production of emerging therapies, such as CGT drugs, highlighting their necessity.The Report sorts out the service content and core strengths of CGT CDMO, and analyzes and predicts the market scale of CGT CDMO.
04
Segmented Areas - Antibody/Protein/Nucleic Acid Vaccine CDMO
Relying on the excellent efficacy of biologics, driven by the rapid development of biotechnology and increased R&D investment, a series of biological products represented by antibodies have gradually become the focus of global pharmaceutical industry development in recent years, with the market size for biological products steadily increasing.
Data source: Analysis by Frost & Sullivan
Among them, antibody drugs have entered a period of vigorous development, with the market size expanding rapidly. From 2017 to 2021, it increased from 118 billion yuan to 585 billion yuan, with an annual compound growth rate of 49.2%. The sub-segment of antibody-drug conjugates (ADCs) has been a hot area in cancer drug research and development in recent years, with the market size also achieving leapfrog growth.The Report summarizes the service content and core advantages of biologic macromolecule drug CDMOs, and subsequently analyzes and predicts the industry market scale in recent years and for the future.
4
Performance of the capital market in the CDMO industry
The competitiveness of CDMO companies mainly focuses on several aspects such as R&D capabilities, development and application of emerging technologies, quality systems, raw material supply, cost optimization, and production capacity. In order to further improve their industry competitiveness and provide customers with higher-quality solutions, CDMO companies continuously expand their production capacity, business scope, and service chain through a strategic model that combines internal development and external mergers and acquisitions.The Report summarizes the financing situations, key mergers and acquisitions events, and service cases of several CDMO companies in the industry over recent years.
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Financing situation
In China, the CDMO industry has witnessed several major financing events. The injection of capital has helped the industry develop rapidly. Looking at sub-sectors, the biopharmaceutical R&D field is booming, bringing huge opportunities to the CDMO industry. The capital market is particularly enthusiastic about biopharmaceutical CDMO and CGT CDMO companies.
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M&A event
Domestic large pharmaceutical companies acquire CDMO enterprises to extend the industry's industrial chain, optimize strategic layout, and seek business transformation; they continuously expand production capacity through mergers and acquisitions and further improve technical capabilities.
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Order transaction event
The CDMO industry continues to empower pharmaceutical companies by providing a range of customized R&D and production services. Under the impact of the COVID-19 pandemic, CDMO companies have taken on a large number of orders for COVID vaccines and therapeutic drugs.
5
Introduction to Domestic CDMO Companies
Wuxing Kangde:Wuxi Biotec Co., Ltd. was established in 2000 in Wuxi, starting with compound discovery services. Through business expansion and mergers and acquisitions, it has extended its operations to areas such as preclinical CRO, clinical CRO, and CDMO. It has now become an internationally leading technology platform company providing comprehensive integrated laboratory R&D and production services from drug discovery and development to marketization. Its business coverage mainly includes five major modules: chemical business, biological business, testing business, cell and gene therapy (CTDMO) business, and domestic new drug R&D services.
Wuxing Biotech:Wuxing Biologics is a globally leading open and integrated biopharmaceutical capabilities and technology empowerment platform, providing comprehensive end-to-end services through its outstanding and unique CRDMO model. It helps partners discover, develop, and produce biopharmaceuticals, realizing the entire process from concept to commercial production, accelerating global biopharmaceutical R&D progress, and reducing R&D costs.
Kanglong ChemicalsKanglong Chemical was established in 2004 and is a leading comprehensive provider of pharmaceutical R&D and production outsourcing services in the industry. The company starts with experimental chemistry services in the drug discovery phase and continuously builds a deeply integrated "full-process, integrated, internationalized" pharmaceutical R&D service platform. By category of main business, Kanglong Chemical has set up four major service sectors: laboratory services, CMC (small molecule CDMO) services, clinical research services, and macromolecule and cell and gene therapy services. Its business scope covers the globe, providing comprehensive R&D and production services for global pharmaceutical companies and new drug R&D institutions to accelerate drug innovation.
Dongyao Pharmaceutical:Dongyao Pharmaceutical was established in 2010. The company focuses on the development and commercialization of innovative oncology drugs and therapies, aiming to become a professional CDMO partner for global pharmaceutical development clients. Dongyao Pharmaceutical adheres to the service philosophy of "assisting innovation with quality and growing together", and with its rich practical experience, mature technical platform, and quality system, it can provide customized service solutions according to the needs of different partners. Through a complete technology transfer process, high-standard GMP production platforms, a comprehensive GMP quality system, experienced regulatory support, and a mature and stable technical team, it provides one-stop CDMO solutions from research and development to commercial production of biologics, especially antibody-drug conjugates (ADCs), empowering partners and promoting the high-quality development of the industry.
Yaohai Biology:Yaohai Biotechnology was established in 2010 and is a professional provider of CDMO services for microbial expression systems. It is dedicated to building an open, comprehensive, and integrated R&D and production service platform for CRO/CDMO/MAH. The company continuously improves and perfects its R&D, production, quality management, and control service systems, constructs distinctive platform technologies, and provides pharmaceutical companies at home and abroad with full lifecycle CDMO services from process development to commercial production with comprehensive service capabilities, rich project experience, and leading scale advantages. It helps customers' new drug projects progress smoothly and continuously empowers the development of the biopharmaceutical industry.
He Yuan Biology:He Yuan Biology was established in 2013 and is a biotechnology company focusing on the field of gene therapy. It specializes in providing CRO services for basic research in gene therapy, including the development of gene therapeutic vectors, gene function studies, drug target and efficacy research, etc. It also offers CDMO services such as process development and testing, IND-CMC pharmaceutical research, and GMP production of clinical samples for the development of gene drugs.
Kailaiying:KaiLaiying Pharmaceutical Group is a globally leading CDMO company that provides high-quality research and development, production, and one-stop services for new drugs worldwide. It takes on the responsibility of accelerating the market launch of new drugs and extending their lifespan by relying on continuous technological innovation. It offers full lifecycle one-stop CMC services for pharmaceutical companies and biotechnology companies at home and abroad, including drug discovery, development, and application, to expedite the development and utilization of new drugs.
Puxin Biology:Puxin Biotech focuses on the field of cell therapy drugs, independently developing a series of cell therapy-related technology platform systems. It can provide customers with one-stop cell therapy CDMO services, helping more projects reach the next milestone earlier and faster. Currently, the CDMO services provided by the company are mainly divided into CAR-T cell CDMO services and CAR-NK cell CDMO services. The products cover plasmids, lentiviruses, and cells.
Boteng Pharmaceutical:Boteng Pharmaceutical was established in 2005 and is a leading CDMO enterprise in China. It is a national high-tech enterprise dedicated to providing customized research and development, as well as customized production services for pharmaceutical intermediates and bulk drugs required throughout the entire lifecycle from early clinical research to drug launch for global pharmaceutical companies and new drug R&D institutions.
Gensire:Gen ProBio, a biopharmaceutical contract research and development organization (CDMO) of Gencircle Biologics, has a one-stop biotherapeutic R&D and production platform. It is mainly committed to providing end-to-end services from target discovery to commercial production for antibody drugs, as well as gene and cell therapy drugs.
Hiperu:Hepalink was established in Shenzhen in 1998 and is a leading multinational pharmaceutical company with an A+H dual financing platform. Its main business covers the entire heparin industry chain, biologics CDMO, and investment, development, and commercialization of innovative drugs. The company's three major business segments work together synergistically, driven by unmet clinical needs, aiming to provide high-quality safe and effective drugs and services to patients worldwide, protecting their health. Hepalink operates its rapidly growing CDMO business through its two wholly-owned subsidiaries: Saiwan Biotech and SPL's CDMO platform, in order to seize growth opportunities in the global biopharmaceutical industry and support the clinical research and development of the company's innovative pipeline products.
Maberry:Mabthery was established in 2013 and is a one-stop outsourcing service provider for biopharmaceutical research and development (R&D) and GMP production. The company mainly provides users with a series of R&D and production outsourcing services for biopharmaceuticals such as monoclonal antibodies, recombinant proteins, and antibody-drug conjugates. In addition, it offers a full-process solution for the synthesis of cytotoxins, linker production, and conjugation during the R&D of antibody-drug conjugates (ADC) drugs.
