The healthcare sector is seeing a sea change with the development of state-of-the-art technologies and manufacturing procedures. Recent trends in the healthcare sector reflect a mounting number of companies adopting a pragmatic approach to introduce fermentation-based drugs with the advent of the latest bioengineering technologies.
Fermentation is poised to influence the growth of the pharmaceuticals industry as it is becoming a critical step in both drug and toll manufacturing. Albeit complex and tedious, implementing the process of fermentation in pharmaceutical production can prove to be cost-efficient for large-scale pharmaceutical production. The growing importance of microorganism has bolstered applications of fermentation in conjunction with recombinant DNA technology in the mammoth pharmaceutical industry.
Leading companies in the healthcare sector are adopting new business strategies to outsource various manufacturing operations in lieu of developing in-house production capabilities. Thereby, recent advancements in pharmaceutical fermentation processes and leading pharma companies rationalizing their manufacturing approach is triggering the growth of the contract pharmaceutical fermentation services market.
This article elucidates the latest trends that are gaining popularity among market players, and will be instrumental in redefining growth prospects of the market.
The ‘Virtual Pharma’ Trend Gains Momentum
Leading industry players are divesting their own manufacturing capacities and hiring full-service pharmaceutical outsourcing companies, mainly to cut back on in-house costs despite compromising on the product quality.
The strategy of divesting portions of their production facilities adopted by large pharmaceutical companies signifies their need to free up their resources, staff, and facilities to concentrate on other important business operations.
Increasing pressure to reduce manufacturing costs and expand competencies, such as marketing and research & development, are among the other important factors to trigger the ‘virtual pharma’ trend. Top-tiered companies in the healthcare industry are seeking to collaborate with third-party or contract pharmaceutical fermentation service providers to enhance efficiencies throughout their value chain.
This trend is likely to generate lucrative opportunities for contract development and manufacturing organizations (CDMOs) as well as contract manufacturing organizations (CMOs) from the healthcare industry. With a rapidly-growing number of CMOs seeking opportunities to partner large pharmaceutical companies, the contract pharmaceutical fermentation services market will soon become an intensely competitive market.
Leading companies in the market are focusing on improving the security of supply, manufacturing flexibility, regulatory compliance, and cost-efficient manufacturing to maintain an edge.
Contract Pharmaceutical Fermentation Development Services Witness Maximum Adoption
The total spending on formulation, development, and manufacturing has always remained the highest throughout the production cycle of a pharmaceutical product.
However, leading players in the pharmaceutical industry have begun to outsource CMOs and CDMOs for formulation, development, and manufacturing of fermentation-based pharmaceutical products. Changing industry dynamics and increasing spending on the development and manufacturing processes is expected to boost demand for contract pharmaceutical fermentation development services in the coming future.
In addition, increasing demand for pharmaceutical products with specialized capabilities, such as solubility solutions and sterile production, will boost the number of new compounds with specialized requirements vis-à-vis development services to enter the segment.
The global market value for contract pharmaceutical fermentation development services was over US$ 1.6 billion in 2018, and it will continue to increase at an incremental rate in the upcoming years.
Expansion of Production Capacities Becomes a Popular Strategy
As the modern production strategies associated with pharmaceutical products find core at microbial fermentation, leading players in the contract pharmaceutical fermentation services market are bracing themselves for potential opportunities in the industry.
Pharmaceutical fermentation is gaining immense popularity in the manufacturing of pharmaceutical products with specific medical indications, such as anticancer cytotoxic drugs, anti-infectious antibiotics, and hormonal disorder therapy drugs. This is boosting providers of contract pharmaceutical fermentation services to expand their production capacities and capitalize on growth opportunities.
Leading companies in the pharmaceuticals and biotechnologies industries, including Manus Biosynthesis, Inc., Gedeon Richter plc, and Porton Biopharma, are expanding their reach in the contract pharmaceutical fermentation services market by opening new fermentation facilities.
Favorable regulatory environment and supportive government policies are contributing to the rapid expansion of pharmaceutical fermentation production capacities worldwide. Along with expanding their geographical presence, contract pharmaceutical fermentation service providers are also adopting strategies to implement state-of-the-art microbial fermentation technologies to fully automate the manufacturing set-up.
Microbial Fermentation Technologies Continue to Evolve
With the ever-expanding range of the applications of microbial fermentation technology, pharmaceutical companies are shifting focus towards research & development to trigger innovations. Though the microbial fermentation technology is not new to the pharmaceutical industry, recent advancements in the technology continue to increase competition in the market.
Technological innovations and the discovery of novel pharmaceutical fermentation solutions are aimed at deriving enhanced yields, shorter production process, increased capacity and product quality, and mitigating contamination risks.
Pharmaceutical companies and contract pharmaceutical fermentation service providers seek a high-tech production method to manufacture cost-effective and novel chemical therapeutics and biochemicals through more sustainable fermentation processes. Thereby, investments in the next-generation pharmaceutical fermentation technologies are likely to multiply significantly in the upcoming years.
Pharmaceutical and Biotechnology Companies Create Multi-Billion Dollar Opportunities
Today, the life sciences sector is emerging as a massive and rapidly-growing market with positive growth prospects for both small and large molecule biologics.
The pharmaceutical industry is expected to cross the US$ 1 trillion mark in the coming decade and consequently, leading contract pharmaceutical fermentation service providers are targeting high-value, high-growth areas of the pharmaceutical and biotechnology industries. Pharmaceutical and biotechnology companies accounted for nearly US$ 2 billion in 2018, and their share in the contract pharmaceutical fermentation services market revenue is expected to remain high in the coming years.
Emerging pharmaceutical and biotechnology companies are adopting virtual models that largely depend on outsourcing, which is expected to create profitable opportunities for contract pharmaceutical fermentation service providers.
On the contrary, large pharmaceutical and biotechnology companies are shrinking their fixed asset base to concentrate on core activities of sales, marketing, and R&D, and outsourcing non-core activities such as development and manufacturing.
Thereby, a mounting number of pharmaceutical and biotechnology companies investing in a major portion of the value chain is expected to create lucrative opportunities for contract pharmaceutical fermentation service providers in the upcoming years.
North American Remains the Most Profitable Region
In 2018, the North American market for contract pharmaceutical fermentation services accounted for more than 40% of the global revenue share. Despite the increasing number of new CMO and CDMO entrants from emerging Asian countries, including China and Asia, CMOs from the North American region have consolidated their position in the market.
The positive growth prospects of the North American contract pharmaceutical fermentation services market are mainly attributed to the dominance of western CMOs and contract pharmaceutical fermentation service providers with reliable assets, advanced technologies, and large manufacturing capacities.
Thereby, growing end-user preference for contract pharmaceutical fermentation services with better quality and high delivery standards over their low-cost variants is expected to create most lucrative opportunities for companies in the North American CMOs and CDMOs in the foreseeable future.
Aditi Yadwadkar is a market research writer with Fact. MR’s healthcare research team. The insights presented here are based on a report by Fact.MR on contract pharmaceutical fermentation services market.