Even after the heady highs of the COVID-19 era, the contract development and manufacturing organization (CDMO) realm remains one of biopharma's buzziest fields.
In fact, as the analytics firm Evaluate sees things, the CDMO market is poised to outpace overall pharma growth through 2028 as contract manufacturers become increasingly vital partners for drugmakers looking to churn out complex therapeutics.
As for 2024, CDMOs can work to advance their goals on three fronts, a group of experts said during a recent Evaluate webinar on the state of the industry. Those are: Embracing advanced therapeutics, building trust with partners and nudging regulators on novel production approaches.
Unsurprisingly, oncology represents the fastest-growing contract manufacturing market, Vincent Spurr, manager of solution consulting at Norstella, said on the December webinar. Injectables, meanwhile, represent the largest looming revenue opportunity for CDMOs, followed by oral medications.
Headwinds on the horizon
To understand what’s in store for CDMOs through the middle of the decade, it’s important to first understand the pain points faced by the industry. Over the past several years, contract manufacturers have experienced dramatic highs and lows, and suffered under many of the same pressures that have affected the larger biopharma industry.
In the wake of the COVID-19 pandemic, for instance, there was a surge in venture capitalist interest in small and mid-sized biotechs that are focused on innovative technologies. Over the course of 2022 and 2023, however, much of that funding has dried up, creating a tough market for the healthcare sector. As biotechs face that difficult environment, the effects have trickled down to their CDMO comrades, Jenny Gattari, CDMO sales lead for North America at Pfizer CenterOne, explained on Evaluate's webinar.
This necessitates a different way of working between CDMOs and their pharma counterparts, Gattari said. There's a bigger emphasis on milestones, which drugmakers typically have to pass to unlock more funding and continue their workflow, she said. On the flipside, Gattari has noticed that enlisting a CDMO earlier in the development lifecycle can help biopharmas secure funding.
Meanwhile, the surge in biotech funding in 2020 and 2021 led many drugmakers to, perhaps unwisely, take manufacturing into their own hands, Matthew Hewitt, vice president and technical officer of cell and gene therapy and biologics at Charles River Laboratories, said on the webinar.
One side effect of these trends is that many companies built out their own manufacturing facilities, which have turned out to be quite expensive to run. Many of those same companies are now selling those facilities or spinning them off into their own CDMOs, which likely contributes to Evaluate’s prediction that the CDMO market will outgrow pharma, according to Hewitt.
Elsewhere, thanks to a recent influx of approved cell and gene therapies, the manufacturing field needs to “start shifting away from primarily a clinical stance on advanced therapeutics,” Hewitt said on the webinar. He noted that many of the smaller CDMOs coming up in the industry now are squarely focused on clinical projects rather than commercial-scale work.
Employee recruitment and retention has also posed a problem for CDMOs in recent years. Hewitt suggested that right under funding, the biggest challenge manufacturers face is “access to a skilled workforce.”
At Charles River, just 3.5% to 4% of employees have a two-year associate degree or below. This number is the result of an industrywide push in recent decades toward requiring four-year degrees. But Hewitt no longer sees those degrees as necessary for many positions.
Recently, Charles River has begun reducing degree requirements for associates to "access to a much larger pool of applicants,” he explained.
Pfizer CentreOne’s Gattari added that her company’s collaboration with universities and technical colleges has also been a boon when it comes to building out a reliable talent pipeline.
Tech transfer tango
CDMOs should also seek out earlier, comprehensive tech transfers with their pharma partners to get the jump on the competition in 2024, Hewitt and Gattari suggested.
Pfizer CentreOne has specifically expanded its development services group to attract companies earlier in their development processes, Gattari explained.
“For us, I think this is better because we feel like we can influence [the process],” she said. By tackling projects at earlier stages, Pfizer CentreOne can be more successful through the commercial phase, Gattari added.
Overall, the biggest potential boon for CDMOs in 2024 would be to push their projects into the commercial stage, Hewitt said. Still, this is easier said than done for certain drugs, including autologous cell and gene therapies, where “we may need to think about different models."
In that regard, the manufacturing industry has been “pushing forward and nudging” regulators to endorse novel production approaches, he said. Hewitt alluded to an FDA presentation in September, for instance, during which the agency made its first public presentation about decentralized manufacturing.
Decentralized manufacturing, in essence, describes a system in which smaller production facilities are spread geographically and closer to the point of patient demand.
Ultimately, CDMOs and pharmas of all sizes need consistent regulatory guidance to embrace new manufacturing technologies. Hewitt, for his part, says Charles River is having those discussions with regulators “all the time.”
“We need to continue to do so if this field is going to reach its full potential,” he said.