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Grand View Research, Inc.

Contract Development Manufacturing Organization Industry Category Intelligence

The growth of Contract Development Manufacturing Organizations and the manufacturing of APIs has been credited to a rise in the demand for generic drugs, patent expirations, and biological innovations. However, the COVID-19 pandemic has drastically increased the demand for innovations and generic drugs, recently. Although there has been an increased demand for APIs catering to these fields, the supply of API has proved challenging. 

The pandemic has resulted in business lockdowns in several parts of the world. China is the first country to face the devastations of the pandemic and as such has extended periods of lockdown. This resulted in over 44 Chinese API manufacturers closing their operations temporarily due to the government-imposed lockdown restrictions. Since China is a leading API manufacturing hub and also the major region, where the raw materials for API manufacturing are found, these non-operational Chinese CDMOs severely affected the supply of API at a global scale. 

Various countries and governments worldwide have opted to boycott APIs made in China. However, this also means that they need to either manufacture or source API from other regions. This dichotomy in the decision versus the supply scenario has resulted in two major changes. First, other regions like Singapore, Belgium, and India are focusing more on API manufacturing, thereby aiming to become the API hubs of the future. Also, corporates are focusing on CDMO from multiple regions to serve locally, thereby omitting the chances of supply chain disruptions like the ones caused by the COVID-19 pandemic. They are also looking to operate from countries where CDMO can import from Chinese players. 

CDMO API Manufacturing Industry Category Intelligence Highlights:

• The CDMO API manufacturing market features a fragmented competitive landscape and several small players are entering the market. However, several mergers and acquisitions are happening recently. The market is expected to consolidate in future 

• Suppliers widely prefer approved provider operating models to reduce risks and improve the potential for value creation 

• Value-based pricing models have become one of the most commonly used pricing strategies recently
• The CDMO market is poised to grow at 7.3 % CAGR between 2020 and 2025 with the potential to reach a revenue of USD 61 billion in 2025.

• The global merchant API market is fragmented with small scale CROs having limited contract manufacturing capabilities operating regionally, affecting the market share of larger CDMOs. 

• Batch manufacturing activities are the largest component and makeup approximately around 65% of the overall cost for manufacturing APIs 

• The supply chain disruptions caused by the pandemic have forced companies to think about diversifying and venturing outside China to set up their manufacturing bases. 

Grab your copy, or request for a free sample of the “Contract Development Manufacturing Organization Industry Procurement Intelligence Report, published by Grand View Research” for In-depth details regarding supplier ranking and selection, sourcing, and pricing criteria & startegies

CDMO Industry – Pricing and Cost Intelligence:

Grand View Research has identified the following key cost components for availing CDMO API manufacturing:

• Project Planning and Management Costs
• Drug Product Analytical Development
• Batch Manufacturing CostsSupplier Management
  • Filter Validation
  • Creation of Batch Records
  • Raw Material Costs
  • Machinery and Accessory Cost
  • Vile Production Costs
  • Other GMP Batch Production CostsStability Studies
• Operational Costs
• Insurance
• Freight
• Service Fee
• Storage
• Admin 

Batch manufacturing cost is the major cost component of a CDMO API manufacturer, accounting for 65% of the total cost of manufacturing.

CDMO Industry – Supplier Intelligence – Capability based ranking & selection criteria with weightage:

Operational Capabilities – Weightage

• Years in Service15%
• Geographical Service Presence30%
• Employee Strength5%
• Revenue Generated10%
• Key Clients10%
• Certifications30%

Functional Capabilities – Weightage

Use molecule35%

• Cyclosporine
• Tetracycline
• Daptomycin
• Vancomycin
• Steroids
• Others

Type 30%

• Innovative
• Generic

Sysnthesis 20%

• Biotech type
• Synthetic type

Other functionalities offered by CMOs15%  

List of Key Suppliers in the CDMO API manufacturing market

• Pantheon
• Evonik
• Lonza
• AMRI
• Siegfried
• Fabbrica Italinana Sintetici
• Hovione
• Esteve

Add-on Services provided by Grand View Research Pipeline: 

Should Cost Analysis

In the CDMO market procurement intelligence report, we have estimated and forecasted pricing for the key cost components while availing services from CDMOs. For our research, we have considered API CDMO services. The cost structure of API CDMO services can be categorized into type major segments; production costs and overhead costs. The production cost accounted for more than 80% share of the overall CDMO service cost. Key cost components of production cost include project planning, medical writing, project management, regulatory affairs, data management, machinery and accessory, raw materials, drug assay, etc. These cost components are majorly driven by the salary fluctuations of personnel involved in the same. Major cost components in the overhead segment include insurance, taxes, and site management cost.

Rate Benchmarking

As we have considered API production cost for small molecules, the size of the batch is one of the most important aspects while analyzing the rate benchmarking of an API CDMO service. In our research, we have analyzed the rates of 100,000 and 50,000 vials batch size in the APAC. By using rate benchmarking analysis, we found that running two production batches of 50,000 vials is 5%-6% more cost-efficient than running one production batch of 100,000 vials. Hence, it is advisable to have multiple small batch production lines rather than having a single large batch production line.

To gain a comprehensive understanding of the other aspects of rate benchmarking, please subscribe to our services for the complete report. 

Salary Benchmarking

Labor is one of the key cost components incurred while offering a product or service. Understanding the pricing structure of salary is important for organizations in selecting the appropriate supplier and to build a good negotiation strategy. It is also an important factor in determining whether the category under focus should be outsourced or built in-house.

Our research indicates that Lonza operations managers earn 20%-30% higher salaries than operations managers from other key CDMOs like Patheon and Siegfried. However, the YoY increment rate in such companies largely depends on KRAs. 

Supplier Newsletter

It is cumbersome for any organization to continuously track the latest developments in their supplier landscape. Our newsletter service helps them remain updated, to avoid any supply chain disruption which they may face, and keep a track of the latest innovations from the suppliers. Outsourcing such activities help clients focus on their core offerings.

Brief about Pipeline by Grand View Research:

A smart and effective supply chain is essential for growth in any organization. Pipeline division at Grand View Research provides detailed insights on every aspect of supply chain which helps in efficient procurement decisions.

Our services include (not limited to):

• Market Intelligence involving – market size and forecast, growth factors, and driving trends• Price and Cost Intelligence – pricing models adopted for the category, the total cost of ownership• Supplier Intelligence – rich insight on supplier landscape, and identifies suppliers who are dominating, emerging, lounging, and specializing• Sourcing / Procurement Intelligence – best practices followed in the industry, identifying standard KPIs and SLAs, peer analysis, negotiation strategies to be utilized with the suppliers, and best-suited countries for sourcing to minimize supply chain disruption

Browse through Grand View Research’s collection of procurement intelligence studies:

• Web Hosting Services Market – The global web hosting services market is valued at USD 65.5 billion in 2020 and it is expected to grow at a CAGR of 15.5% from 2020 to 2025 due to growth in the business activities of the organizations and the subsequent need of handling web traffic. North America dominated the market with a revenue share of 35.28% in 2020 followed by Europe and APAC. The shared hosting segment is the largest web hosting service segment due to the high adoption rate among the small and medium enterprises.
• Medical Waste Disposal Market – The global medical waste disposal market is valued at USD 7 billion in 2020 and it is expected to grow at a CAGR of 6% from 2020 to 2025 due to the increasing volume of healthcare waste and from the pharmaceutical and healthcare industry post-Covid-19. North America and Europe have the largest share in the medical waste disposal market as these two regions have more standardized and structured medical waste management systems in place compared to other regions. However, APAC is expected to witness the highest growth rate, due to the rising social awareness and establishment of strict regulations for the proper disposal of medical wastes.

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