Sector Report

We view the contract development manufacturing organization (CDMO) space as one of the most exciting growth verticals in pharma services.

Read our full take in the report here.

In particular, the rise of new precision medicines is reshaping the CDMO competitive landscape and refocusing the consolidation strategies of many of the CDMO executives and private equity investors that we talk to. We see opportunities for forward-looking CDMOs to position themselves as early market leaders in emerging, high-growth verticals such as antibody drug conjugates (ADCs), radiopharmaceutical drugs, and cell/gene-based therapies.​

1. Improving Prospects for the Broader CDMO Space.

   • We have been hearing more and more optimism from our private equity-backed CDMO relationships in recent months. A recovering biopharma funding environment should translate to opportunities for CDMOs, particularly with small/mid-sized biopharma firms that do not typically have in-house manufacturing themselves and are more reliant on third-party CDMOs. Also, we think there is a premium on domestic manufacturing infrastructure given heightened global trade tensions with countries like China, Canada, and Mexico.​

2. Focusing on Precision Medicine.

   • While GLP-1 drugs manufactured by bellwether pharma companies have captured much of the media limelight in recent years, forward-looking CDMO executives are telling us that they are increasingly considering opportunities in emerging precision medicines, many of which are pioneered by smaller biotech firms. We expect outsized growth for CDMOs who can successfully position themselves in these emerging/high-growth medicines.​

3. Need for CDMO Specialization.

   • Over time, with the rise of precision medicine, we see specialization becoming a competitive necessity for CDMOs in a way that had not been the case in the past. Traditional CDMO manufacturing infrastructure is often poorly suited to meet the small-scale/customized production requirements of precision medicines, in our opinion. Also, the manufacturing of precision medicines often requires greater collaboration with sponsors, suppliers, and regulators.​

4. Targeted Acquisition Strategies.

   • In the past, much of the consolidation in the CDMO space has been around the vision of creating a “one-stop-shop.” However, as biopharma manufacturing gets more specific, manufacturing one type of medicine is not necessarily synergistic with that of other medicines, even if the CDMO shares the same customers. Now, we are hearing more conversations about consolidation strategies focused on specific drug modalities and categories. “Specialist CDMOs” have the potential to become a new category of competition — between the mega-CDMOs and the niche CDMOs.​

Learn More from Bourne Partners

Should you be interested in discussing the report or the industry with our team, please reach out to Don Hooker.

In the dynamic healthcare industry, staying ahead of trends is essential for informed decision-making and seizing opportunities. Please reach out to our research team for more information.