As COVID-19 has infected and killed millions across the globe, it has spurred researchers to accelerate the delivery of therapeutics and vaccines. But the reality is that the process of drug and vaccine research and development is time-intensive, requires high capital outlays, and takes place in a complex multi-party ecosystem that includes regulatory agencies.
Nevertheless, the pharma and biotech industries have stepped up to respond to the global health emergency, driving fast approvals of several vaccines—and companies in these fields are on the lookout for innovative solutions to enhance drug development and manufacturing.
Contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) are merging together to provide one-stop solutions for pharma companies. Their services include drug discovery, formulation, and commercialization across the entire industry value chain.
What Drives the Growth of the CDMO Market
External assistance and consolidation have caused the growth of the global CDMO market. CDMOs handle the outsourced manufacturing of biological, nutraceutical, and pharmaceutical materials, and are involved in some innovation and development work prior to the manufacturing process.
Hence, a CDMO is a crucial part of the ecosystem. CDMOs are assured fees for service work on behalf of biotech and pharmaceutical companies. They offer services ranging from preclinical research, such as cell line development, all the way through to clinical or commercial manufacturing.
A CDMO is a very useful outsourcing arm for emerging biotech companies, as it reduces high fixed costs while taking on the risks of execution and technical development. For established firms, a CDMO can help rapidly access specialist resources and capacity around key bioassay development, process development, or manufacturing.
The drive to operate biopharmaceutical companies in a leaner manner has in part contributed to an explosion of the CDMO industry. Growing consolidation, R&D initiatives, and rising need for pharmaceutical products will also drive the growth of this market, which is consolidated in nature.
In the pharmaceutical industry, medicine is continuously tested and is most profitable during the period in which it's under patent; the emergence of increased competition hampers return rates. Such factors push for continued innovation and fast-track time to market
As pharma businesses suffer from high R&D costs, capacity constraints, adhering to strict government regulations, and elongated time to market, they rely on external partners to expedite the drug manufacturing process. According to ResearchAndMarkets.com, the global pharmaceutical CDMO market was valued at $160.12 billion in 2020, and it is expected to reach $236.61 billion by 2026, registering a compound annual growth rate of of 6.5 percent during the forecast period.
CDMO in the Post-Pandemic World
Despite growing demand for CDMO services, CDMOs themselves are in fierce competition with one another around capabilities, service quality, and cost, with many leveraging geographic cost differences to deliver superior savings to their clients.
In the post-pandemic era, there may be less scope or incentive to use international resources. The COVID-19 crisis has illustrated that a homegrown biosecurity infrastructure is now a critical part of a national economic and security strategy. As such, the ability to develop, manufacture, and package a therapeutic or vaccine will become part of critical infrastructure.
Nevertheless, there is competition on cost between CDMOs in developed economies and those in emerging economies across a range of distinct modalities, including chemistry and biology, within the value chain. This has challenged the ability to drive cost reductions through standardization of processes, which can create economies of scale, or to deliver infrastructure that is elastic to demand and accommodating of high molecular diversity and complexity. To overcome challenges, CDMOs must embrace integrated technology platforms that leverage physical automation and data science.
Cloud-Based ERP Empowers Digital Transformation
Digital transformation is a must for CDMOs to increase their competitiveness, and implementing enterprise resource planning (ERP) software is a must for CDMOs that strive to efficiently increase future capacity, deliver consistently to clients, and uphold regulatory guidelines.
Cloud-based ERP systems tailored specifically for CDMOs are a quick win. Speedy deployment is possible in a few weeks, and the system can deliver integrated and standardized processes to help automate processes. ERP can also provide a holistic view of data and help remove hurdles in complying with regulations.
Cloud-based ERP is like a digital backbone for a business, and helps to integrate not just CDMOs' internal operations, but also their connections with their outsourcers across different geographic areas—all while streamlining processes and helping to reduce cost and time to market.
Technology and modern equipment play a major role in allowing CDMOs to remain flexible and assist current and future clients. Cloud-based ERP built specifically for CDMOs will empower simplified processes and drive CDMOs along their digital transformation journey in an intensely competitive and growing market.
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