Frost & Sullivan (Frost & Sullivan, abbreviated as “Sullivan”) officially issued the Research Report on the Development Status and Future Trends of CDMO Industry (hereinafter referred to as the “Report”) on September 28, 2022, conduct an in-depth analysis on China's CDMO industry, explore the industry value of CDMO from various aspects such as industry overview, capital popularity and competitive pattern, explore the driving forces behind the development of the industry, and track the iteration of production process technology.
Under the boom of innovative research and development, the competition in the pharmaceutical industry is becoming increasingly fierce, and the division of labor in the pharmaceutical industry chain is gradually becoming more specialized, refined and customized. With its technical advantages and production capacity, CDMO helps pharmaceutical companies achieve everything from concept to product, from process development to scale up production. Entrusting CDMO enterprises has become an important path for innovative R&D and production. Both start-up pharmaceutical companies and large pharmaceutical companies can benefit from the quality services provided by CDMO, and CDMO, following the rapid changes in the pharmaceutical market, continuously optimize its technology platform, expand the business scope, and extend the industrial chain to meet the actual needs of different types of customers. While focusing on the overall operation of the CDMO industry, this report focuses on the development status of various CDMO segments.
PART 01 CDMO Industry Overview
CDMO Introduction - Multiple factors have spawned the CDMO industry, which has entered a stage of steady development
CDMO evolved and iteratively upgraded from CMO. As the competition among pharmaceutical companies became more and more intense, simple OEM production carried out by traditional CMO companies could not meet the needs of pharmaceutical companies such as cost reduction and efficiency improving. On this basis, CDMO companies that can use their own production equipment and technical advantages to help pharmaceutical companies optimize production processes and carry out customized scale up production have emerged. The CDMO industry has continued to develop since its inception and has now entered a period of steady development.
CDMO Development History
Start-up period
Before the 1990s
The CDMO industry is budding, and CDMO companies that provide a certain service are gradually emerging, but the number of CDMO companies is small. APIs and intermediates are mainly produced by pharmaceutical manufacturers themselves or provided by chemical companies
A period of rapid growth
End of 1990s - end of 2000s
A large number of pharmaceutical companies sold unused production capacity due to the expiration of patented drugs to CDMO to reduce costs, and CDMO companies grew rapidly. At the same time, early innovative pharmaceutical companies entered a period of rapid development. Insufficient production capacity prompted an increase in demand for CDMO, and the CDMO industry ushered in a golden period of development
Stable development period
Since the end of 2000s
The research and development for new medicine is hot, the CDMO industry market that provides R&D and production services is developing rapidly, various mergers and acquisitions have emerged, and CDMO companies continue to expand its business scope.
CDMO service scope - CDMO provides multi-dimensional drug development and production for pharmaceutical companies, and the service area continues to expand upstream and downstream of the industry
CDMO provides R&D services and production capacity support with technical added value throughout all stages of R&D. The scope of services set up by CDMO companies for pharmaceutical companies includes pre-clinical and clinical CMC services, process development, production, and packaging services for APIs, intermediates, and drug products. In the drug development stage, CDMO can improve drug development efficiency and reduce R&D costs; in the drug commercialization stage, CDMO can reduce enterprise production costs and improve production efficiency through continuous process optimization, while ensuring product quality and supply stability.
According to drug type, the CDMO segment can currently be divided into three main categories: micromolecule CDMO, macromolecule CDMO (including peptide/antibody/protein/vaccine, etc.), and Cell and Gene Therapy (CGT) CDMO. The structure of micromolecule drugs is simple , with strong disassemblability in chemical synthesis steps, and most compounds have the characteristics of high stability and convenient transportation, so there’s a standardized process for micromolecule CDMO products, following the product preparation path of “basic chemicals - non-GMP intermediates - GMP intermediates - APIs - drug product”, which is easy to be industrialized; Compared with micromolecule chemicals, the macromolecule biopharmaceutical is with a more complex structure, with more difficulty in development costs and production/imitation, and macromolecular leading CDMO companies occupy a high market share with advantages such as technology and production capacity; Cell and gene therapy production process is complex with high technical barriers. Currently, it is still in the early stages of development, but its global research pipeline is growing rapidly, and the CDMO industry, which relies on CGT industry trends, is also developing rapidly.
CDMO segment product and technical requirements
| CDMO segments | Main services | Reaction instruments | Required process technology |
| Micromolecule CDMO | R&D and production services for chemicals, intermediates, APIs, etc. | Reactor | Continuous reaction technology, biosynthesis technology, enzyme catalysis technology, photochemistry and electrochemistry, asymmetric synthetic chemistry technology, etc. |
| Macromolecule CDMO | Raw material, protein and antibody preparation, stable cell line and process development, production and R&D for biological drug product and so on. | Single-use reactor and stainless steel tank | Enzyme catalysis technology, cell-free synthesis technology, gene synthesis technology, codon optimization technology, etc. |
| CGT CDMO | Plasmid, virus and cell products from process development to clinical production and R&D services | Cell culture instruments, separation instruments, etc. | Viral carrier related technology, gene editing technology, stem cell preparation technology, cell culture technology, etc. |
The upstream of the CDMO industry is the fine chemical enterprise providing basic chemical raw materials, which can be prepared to special pharmaceutical raw materials through sorting and processing. The preparation of APIs is the foundation of drug research and development. Its main purpose is to provide qualified APIs for pharmacological toxicology, drug product, clinical and other research during drug development, to provide information for quality research, and to ensure the stability and viability of production processes. CDMO companies verify the quality of raw materials and process professional pharmaceutical raw materials to starting materials, intermediates, APIs, and drug products for downstream pharmaceutical companies, biotechnology companies, academic R&D institutions, etc.
Upstream
Fine chemical enterprises
Provide basic chemical and biological raw materials, which can be prepared to special pharmaceutical raw materials through sorting and processing.
MidstreamCDMO enterprise
Processing professional pharmaceutical raw materials into starting materials, GMP and non-GMP intermediates, APIs, and drug products.
DownstreamPharmaceutical companies
Conduct drug research and development, and biotechnology research
Commercial production of pharmaceuticalsThe Report explains that the CDMO industry, as an important participant in pharmaceutical R&D and production, will empower pharmaceutical companies in the following four areas: assisting R&D and production, reducing enterprise costs, improving service efficiency, and promoting technology iteration.
CDMO service advantages
Assist in R&D and production
CDMO assists in the R&D and production of drugs in the preclinical, clinical, and commercialization stages, enabling enterprises to optimize the allocation of resources and engage more in the research and development of core technology.
Reduce enterprise costs
CDMO can help pharmaceutical companies reduce production capacity construction and reduce the company's fixed asset costs; CDMO's ability to negotiate with the upstream will help pharmaceutical companies optimize costs and improve their profit margins by strategically binding with upstream suppliers.
Improve R&D production efficiency
The CDMO industry can intervene in the early stages of new drug development, lay out the overall process flow, improve service efficiency, and ensure the stability and sustainability of drug quality.
Facilitate technology iteration
CDMO and pharmaceutical enterprises that focus on R&D and production processes can achieve coordinated development and overcome technical difficulties through specialized division of labor, accelerate product technology platform iteration, and achieve faster R&D speed.
PART 02 CDMO industry market size and development trend
Global and Chinese CDMO Industry Market Size Analysis — The overall CDMO market in China will expand at a faster rate than the global growth rate, and its share in the global market will continue to rise.
The Report estimates the size of the global and Chinese CDMO markets. From a global perspective, the CDMO industry is in a trend of continuous and scale up development, maintaining a high level of market prosperity. From 2017 to 2021, the global CDMO market size grew from $39.4 billion to $63.2 billion, a CAGR of 12.5%, and is expected to reach $124.3 billion in 2025 and $231 billion in 2030.
CDMO plays an important role in the pharmaceutical innovation industry chain. With the rapid development of innovative drug research and development in China, the CDMO industry is developing strongly and has ushered in rapid growth in recent years. From 2017 to 2021, China's CDMO market grew from RMB 13.2 billion to RMB 47.3 billion, with a CAGR of 37.7%. It is expected to reach RMB 157.1 billion in 2025 and RMB 355.9 billion in 2030. China's CDMO industry has shown a rapid growth higher than the global level, and the proportion of China's CDMO market in the global market is growing year by year. China’s CDMO in 2017, the market accounts for only 5.0% of the global CDMO market, and has expanded to 13.2% by 2021, and is expected to account for one-fifth of the global market after 2025.
Based on the current market situation and overall trends, the Report looks forward to the future development trend of the CDMO industry from three important dimensions:
•Expand production capacity, accumulate customer resources, and accelerate the pace of global expansion through horizontal integration.
•Extend the scope of business through multiple paths, lay out a complete industrial service chain, and build a one-stop service platform.
•The business and service models are constantly innovated to create distinctive and differentiated advantages.
PART 03 CDMO Industry
Segments - Micromolecule Chemical CDMO
Modern drug research and development begins with chemicals. Chemical drug technology is maturing, and it is progressing rapidly in the transformation process of scientific research achievements. Although emerging fields such as biopharmaceuticals and Cell and Gene Therapy (CGT) therapy have developed rapidly in recent years, chemicals are still the mainstream form of medicine.
With the deepening of research on disease mechanisms, drug research and development has gradually entered the era of precise treatment for targeted research and development. The properties of the corresponding new drugs have clearly changed: drugs have more accurate and selective targeting effects, and the composition of high-activity drugs has increased; the molecular weight of drugs has become significantly larger and the structure is more complex; and the water solubility and permeability of drugs have become lower. A series of changes in the properties of new chemicals also require simultaneous follow-up with corresponding emerging synthesis and drug product technologies. In addition, the increased difficulty in exploring and discovering new molecule physical drugs has brought about higher investment costs for new drug development, increased risk factors, and fierce market competition. As a result, drug research and development has entered an era of pharmaceutical drug product innovation. The research and production of new high-end complex drug product has also brought new challenges to the chemical pharmaceutical process. The micromolecule CDMO industry has also established a series of advanced processes technology platform along with these new drug molecules, expanding its range of service capabilities from laboratory to laboratory. The Report subsequently summarizes the service scope and main service advantages of micromolecule chemicals CDMO, and further reflects the comprehensive service capability of micromolecule chemicals CDMO by citing a series of technologies and equipment provided by CDMO enterprises in the R&D and production process. In addition, the Report includes developments in the global and Chinese micromolecule chemical CDMO market size in recent years, as well as predictions of future growth space trends.
Segment - Peptide Drug CDMO
The advantages of peptide drugs compared with micromolecule chemicals and protein drugs are gradually explored during the development. They are close to micromolecule chemicals in terms of quality control level and close to protein drugs in terms of activity, which has advantages of both. Because of the high activity and selectivity, the peptide drugs have obvious advantages in the treatment of complex diseases.
Due to its bioactivity and unique advantages, the research on peptide pharmaceutical process has become a hot topic in the current peptide research. Its synthesis, separation and purification technology are in the process of continuous iteration, but there are still high barriers to scale up production. The Report details the technical barriers faced by peptide drugs during scale up commercial production from the two stages of synthesis, separation and purification. It summarizes the range of services that the peptide drug CDMO can provide as a third-party service provider and its main service advantages. In addition, the Report analyzes and predicts the market size of peptide CDMO.
Segment - CGT CDMO
Cell and Gene Therapy (CGT) has become a new generation of breakthrough precision therapy with significant therapeutic advantages, and the related clinical transformation and commercialization are accelerating. Up to now, the US FDA has approved 25 CGT products, including more than 10 products containing viral carrier modifications. The increase in the number of listed products will rapidly open up the CGT market and accelerate the pace of CGT therapy from R&D to commercial production. At the same time, as a hot R&D field, the rapid expansion of the R&D pipeline has spawned huge demand for R&D and production. As the supervision system becomes clearer, the R&D investment increases gradually, and the entire innovative industries develop vigorously, more CGT products will enter the clinical research and development stage in China in the future.
The commercial development of CGT products requires scale up production and sustainable supply. Taking the current production process of CAR-T cell products with the fastest commercialization process as an example, the Report thoroughly analyzes the main reasons that limit their viability:
•The production process and technology are complex, and the dilemma of insufficient production capacity needs to be solved urgently
•The cost for drug development and production are high, and R&D companies are strongly willing to cut costs.
The production process of CGT products involves three relatively independent process segments: plasmid process, viral carrier process, and cell process. The Report summarizes the key difficulties and technological breakthroughs in each production process, and tracks the future direction of process development in the current CGT field. The service advantages provided by CDMO highlight the need for the development and production of CGT drugs for emerging therapies. The Report sorts out the service content of CGT CDMO and its core advantages, and analyzes and predicts the market size of CGT CDMO.
Segment — Antibody/Protein/Non-Nucleic Acid Vaccine CDMO
Thanks to the excellent efficacy of biopharmaceuticals, a series of biological products represented by antibodies have gradually become the focus of development in the global pharmaceutical industry in recent years due to factors such as the rapid development of biotechnology and increased R&D investment, and the market size of biological products has risen steadily.
Among them, antibody drugs entered a stage of booming development, and the market size expanded rapidly. From 2017 to 2021, it increased from RMB 11.8 billion to RMB 58.5 billion, with a CAGR of 49.2%. Segmented circuit antibody conjugated drugs (ADC) are a hot field for anti-cancer drug development in recent years, and the market size has also grown by leaps and bounds. The Report summarizes the service content and core advantages of CDMA for biomacromolecule drug, and then analyzes and predicts the market size of the industry in recent years and in the future.
PART 04
Introduction to Key Domestic CDMO Companies - Yaohaibio
Yaohaibio, founded in 2010, focuses on CXO services for microbial expression systems. Currently, it has built a mature one-stop CDMO service platform for polypeptides and protein drugs, and its business is focused on “Recombinant proteins/polypeptides, recombinant plasmids, nucleic acid drugs, nanobodies, novel recombinant vaccines” and other fields, throughout the whole life cycle of early research, IND clinical application, clinical sample GMP production and commercial production.
The company has continuously improved the R&D, production, quality management and control service system, and built a unique platform technology. Currently, it is gradually laying out the construction of a CRDMO one-stop service platform for long-chain nucleic acid drugs, empowering mRNA and circRNA drug development. At the same time, with leading process technology platforms and scientifically standardized service systems, it has successfully delivered more than 200 projects up to now, actively promoting the smooth progress of customers' new drug projects and continuously empowering the development of the biomedical industry.
