Outlook
CDMOs’ outlook for the immediate future naturally varied with their place in the market and size, but all were confident that the CDMO is here to stay. The market has been down for six quarters, Kaus noted, and has not come back quite as soon as some expected. However, it will rebound in the next six, “and then we'll look for capacity on the market. CDMOs will also look at how they can increase capacity.”For Confetti, sustainability presents both a challenge and a major opportunity. Customers are asking Dipharma about its path forward and the company is set to submit its first sustainability report in 2026. Ravi agreed, adding that being certified for sustainable practices is not an advantage but a qualifier. “You need to be at least meeting a certain bar. You need to be qualified to be part of global supply chain,” he said.Everyone now wants a ‘+1’, Ravi continued. This is creating opportunities in India and elsewhere. There was a broad consensus that India will become a bigger player, partly because of this but also because AI coming into the picture will play well to India’s IT skills. There should also be opportunities for large U.S. and European CDMOs to collaborate with their smaller Indian counterparts.
There should also be opportunities for large U.S. and European CDMOs to collaborate with their smaller Indian counterparts.
Biologics is at “an interesting inflection point”, Stapleton said. For some years, mAbs were the big thing, now it is biosimilars, “which I think are going to be diversifying into more regional market supply”. New modalities, notably antibodies are creating drugs that are “works of art” but very difficult to manufacture. They are also often so potent that only tiny volumes are needed, which might align with the demand for personalised medicine.
“I'm not sure whether we're really going to be heading there, but there is going to be a movement into more diversified drugs for more specific indications,” he added. CAR-T cell therapy may rebound or mutate. Cell and gene therapy has still not lived up to its full potential and manufacturing needs to be commoditised “or it's going to remain difficult for CDMOs to be successful in that space”. RNA had a massive boost from Covid but that was a relatively easy target.
“The biologics in the pipeline at the moment are going to be more specialised in terms of their patient population and the scalability and flexibility that we offer has us excited about the space,” Miller said. “I've been in the CMO industry now for 20 plus years and I enjoy the heck out of it because at the end of the day it is a smart use of capital.”
CDMOs are not going away and the opportunity to participate in drug development, manufacturing and supply chain will advance, he added. There may be consolidation in the long term, but “in every space, there are specialities that are easy to get into but require specialised knowledge to execute. And until the technology and the tools commoditise the industry, you will continue to have specialists supporting teams for the near term.”
Blocher was less bullish because of the geopolitical situation and, specifically in Europe, bureaucracy. The early phases are down, which will impact the later stages in two to three years’ time. For now, however, the late-stage and growth phases are doing well and decoupling from China will spur investment in the West where capacity is currently lacking. “For those who have the capacity, I think there's good growth potential,” he concluded.
