Published Date : 18 Jan 2023
The global healthcare contract manufacturing market size was exhibited at USD 282.44 billion in 2022 and is expected to touch around USD 516.7 billion by 2030, growing at a CAGR of 7.84% from 2022 to 2030.
Because of the COVID-19 epidemic, the pharmaceutical industry went out of contract manufacturing in droves. Its increase from USD 934.8 billion in 2017 to $1.17 trillion in 2021 demonstrates the industry phenomenal expansion, while real estimates might be substantially higher owing to better health outcomes being a worldwide priority in 2020.
Pharma companies have been saddled with strong financial performance in order to catch pace with demand, specifically when it comes to purchasing and operating expensive equipment for pharmaceutical mass manufacturing.
To fight this, several businesses have begun to outsource their manufacturing to contract manufacturers (CMs) that have the necessary equipment, facilities, and labor force to conduct more cost-effective operations. This type of outsourcing is revolutionary.
Pharmaceutical company facility divestments would drive outsourcing and also contracts for goods that become general in nature or non-core, as well as new product manufacture when the pharma sector lacks manufacturing skills or experience. CMOS are increasingly acquiring or developing biologics functionality and capacity; even so, because the vast bulk of biologics and advanced therapeutic applications are marketed by bigger market cap companies which are less likely to delegate, CMOs will need to find ways to incentivize these companies in order to achieve a good return on investment.
Approximately 3,000 genetic testing and gene-modified cell treatments are in the pipelines, according to the global data drugs database, spanning from discovery through preclinical to medical and pre-registration phases.
Advanced medical device firms collaborate closely with suppliers, including such medical device contractual manufacturing, to bring high-quality goods to market. When looking for partners with a proven track record, manufacturers must blend cost-efficiency and dependability with sophisticated technology.
Many of these businesses will be continuing to outsource a portion of their manufacturing process to other countries, providing they access to a broader talent pool and reduced costs. As a result, corporations are constantly looking at the devices' supply chain as a strategic opportunity to maximize their technological edge.
The sector is divided into two types: pharmaceuticals and medical devices, with the pharmaceutical category accounting for the majority of sales (74.8 percent) in 2021. The medical device market is further subdivided by kind and therapeutic area.
In 2021, the cardiology category held the highest share. The increased demand for cardiovascular devices as a consequence of an increase in instances of related diseases is ascribed to the expansion of these products' outsourcing.
Healthcare Contract Manufacturing Market Report Scope
|Market Size in 2022||USD 282.44 Billion|
|Market Size by 2030||USD 516.7 Billion|
|Growth Rate from 2022 to 2030||CAGR of 7.84%|
|Forecast Period||2022 to 2030|
|Segments Covered||By Service, By Type, By Class, By Type of Manufacturing and By End Use|
|Regions Covered||North America, Europe, Asia-Pacific, Latin America and Middle East & Africa|
The Asia Pacific (APAC) region accounted for the greatest revenue share in 2021 and is predicted to maintain its dominance over the projection period as healthcare services improve and developing nations grow economically. Furthermore, the cheap cost of performing clinical trials in this area motivates manufacturers to relocate their manufacturing operations, which supports market expansion in APAC.
Due to the existence of a high number of prominent organizations in the area, Asia Pacific is also predicted to develop significantly during the forecasted period. These companies are concentrating on expanding their manufacturing facilities in order to meet the increasing demand for medical devices and medicines. This will eventually propel the region's pharmaceutical and medical device segments.
Furthermore, The Asia Pacific region will have the biggest market share in 2020. The APAC region's dominant share is primarily due to lower raw material and labor costs compared to developed countries, increased demand for medical devices due to improved healthcare infrastructure, due to the implementation of advanced technologies, and the presence of less stringent regulation and oversight than most developed countries.
Given the high demand for medical equipment, the potential for CMOs with medical device knowledge is growing. In fact, the USFDA authorized over 100 medical devices in 2018. It is worth noting that more than 65 CMOs have been founded since 2000. Merger activity in this industry has been fueled by the desire for one-stop shopping and adaptable supply-chain management.
Modern contract service providers have been focused on strengthening in-house skills in order to deliver a broader range of services to their clients, ranging from product creation to marketing and distribution, as well as legal help.
Researchers anticipate that the demand for core strengths such as design and engineering, design process, and large volume industrial production will keep driving sponsor companies to consider outsourcing multiple aspects of their item research and production operations to proficient contract service providers. In a competitive environment, the availability of modern tools and technology is a key differentiator; CMOs that invest in such improvements are likely to acquire a competitive advantage.
Several APAC governments are pushing players for the inclusion 4.0 into their production-related processes in regard to accelerating the many developments of technologically innovative medical equipment. Thailand's 4.0 growth model, for example, established an innovation center to improve the research and manufacture of Medtech gadgets.
The Intellectually Property Innovation-driven with Entrepreneurship Center (IP-IDE) has their own data pool and patent information, which it shares with small and also medium-sized firms (SMEs) to help them create innovative technologies. The Thai government hopes that the IP-IDE center would inspire Thai medical device businesses to develop and grow into domestic and international markets.
Other many medical devices businesses are also purchasing CMOS in order to cut their contract manufacturing costs. This is causing a change in the manufacture of medical devices. Nordson (US) bought the advanced in-house technology business section of Vention Medical (US) in 2017.
This division specializes in the design, development, and production of minimally very invasive interventional delivery devices, components catheters, and they are sophisticated. This also would result in the small portion of a medical device manufacture shifting from CMOs to OEMs.
Several factors are driving the growth of the healthcare sector, including the increased emphasis on public-private partnerships, the ageing population, a growing middle class, and the accelerated adoption of the digital technologies, including the telemedicine, in addition to these increased investor interest and greater FDI inflows over last two decades. The COVID-19 epidemic has given both obstacles and opportunities for businesses to thrive.
The crisis has thrown open the floodgates for new businesses, many of which have risen to the occasion and hastened the creation of low-cost, scalable, and rapid solutions. Furthermore, the pandemic is accelerating the growth of telemedicine and the home healthcare business.
All of these elements, when combined, make the healthcare business suitable for investment. The growth of private players to Tier 2 and Tier 3 areas outside of urban cities presents an appealing investment opportunity in the hospital market.
For example, with the latest PLI initiatives, India has the chance to enhance domestic pharmaceutical manufacture while also presenting investment opportunities in categories such as contract manufacturing and research, over-the-counter medications, and vaccines. India is also a land of opportunity for companies in the medical device business, with enormous potential for the growth of diagnostic and pathology centres, as well as miniaturized diagnostics.
Because of new and non-traditional entrants, disruptive technologies, and firms with global aspirations coming from high growth economies, the competitive environment for medical devices in 2030 is set to appear fundamentally different than it does now. The often-mentioned, pervasive forces of disruption are at work in healthcare, and this trend is expected to continue until 2030.
The medical device market is expected to experience continuing entrance of new competitors from all industries over the next decade, driven by the desire to enable better treatment at reduced prices. By using technology, these new rivals are extremely likely to introduce redundancies in today's value chain, just as previous platform firms have done.
Alibaba, the world's largest e-commerce company, has already joined the sector, exploiting its extensive logistical capabilities and massive client base23 (please see pages 16-17 for the 'New markets' section and the 'Rise and Rise of China in the Global Medical Device Industry'). Online stores in the United States are expected to follow suit, with some offering a wide range of medical equipment such as infusion pumps, catheters, IV bags, sutures, forceps, hospital beds, scalpels, and other lab products.
They might reduce margins by up to 20%, placing existing medical supply wholesalers and manufacturers under pressure. These new entrants are likely to overcome regulatory constraints and climb upwards to sell higher-end items over time.
Somnics, Inc. and Maxnerva Technology Services inked a cooperation agreement in June 2021 to collaborate on the contract manufacturing and development organisation (CDMO) of in vitro testing devices (IVD). Furthermore, Biofortuna, a contract research and production partner to the IVD and point-of-care testing sectors, will increase its manufacturing capability in November 2021 after relocating to modern state facilities in Deeside, North Wales.
Major Key Players
By Type of Manufacturing
By End Use
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