New companies flooding CMO market

More evidence that biologic drugs are where it's at: Experts are predicting tough times ahead for contract manufacturers that focus too closely on Big Pharma's bread-and-butter small-molecule products. Contract biomanufacturers, on the other hand, are seeing stronger growth. Companies such as Kendle--which reported more than 40 percent revenue growth last year--and Icon Clinical Research are posting big gains.

Plus, here's a silver lining to the new caution among drug regulators: Contract research organizations that zero in on clinical-development manufacturing, on the other hand, are doing "quite well," with 20 percent or higher revenue growth--at least in part because watchdogs want longer, larger Phase III trials and post-approval monitoring, too.

Signs of potential hardship lie ahead, though. Big Pharma has been investing  heavily in biologics capacity, which could cut into outsourcing of those products. And as more and more contract manufacturers enter the market--some by buying plants that Big Pharma has been offloading--price competition is rearing its ugly head. "This overcapacity is already leading to pricing pressure," Pharmsource president Jim Miller said at a recent trade show. "And this is before serious Asian competition has entered the market."

- see the story at Outsourcing Pharma

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