2025 Pharmaceutical Industry Contract Services Forecast to Grow; 49% of Analysts Optimistic About the Future

The coming month will be a critical juncture, as growth in contract services is expected to accelerate through 2025, according to the latest research from 280 pharmaceutical companies. These forecasts not only reveal the prospect of even better growth in 2025, but also reflect the industry's opposition to the recently passed BIOSECURE Act.

Most analysts point to a slower-than-expected recovery in the first half of 2024. PBOA President Gil Roth reflected on the past year in the upcoming CPHI 2024 Annual Report: "While the report indicates that dollars are being reinjected into late-stage (CDMO) assets, there are few signs that early-stage pipeline products are gaining financial support. This means that CDMO's lifeline - where projects go through the development pipeline and small customers continue to work with major service providers - is still struggling."

However, the broader industry sector is currently more optimistic about the growth prospects of contract services companies over the next 18 months, with 49 per cent viewing the outlook as very positive, 44 per cent as neutral and only 7 per cent as "negative".

Another big focus for contract services in 2024 is the oversupply of GLP-1 drugs, the lack of existing contract capacity, and the impact that the ongoing BIOSECURE Act may have on the outlook for the contract services industry. It is widely believed that the act has further accelerated the trend of diversifying the supply chain after the pandemic, prompting CDmos in the United States and India in particular to show greater interest in forming strategic partnerships.

A key finding was that most of the industry did not support BIOSECURE's stated goals. Only 19 per cent said China's CDMO "poses a threat and should be removed from Western supply chains". Thirty-eight percent of respondents disagreed with this view, arguing that BIOSECURE is a "politically motivated issue that sets a worrying precedent for the industry." Forty-three percent of respondents - making it the largest group - took a balanced view, recognizing "Wuxi Apptec's significant contribution to the industry" while also noting the wisdom of "diversifying supply partners" in the industry.

These findings show that global pharmaceutical companies, both innovative and generic, are now actively seeking a wider range of supply chain customers and key development partners. More than 600 contract service providers will gather at CPHI Milan next month, and discussions are expected to gather pace as funding in the biotech sector begins to translate into larger trading volumes in 2025 and beyond.

Tara Dougal, Director of Brand and Content at CPHI Milan, added: "CPHI's contract service area continues to grow year on year, driven in large part by the industry's need for trusted partners who can provide the capabilities to address the nuances of complex treatments and support the commercialization process. CPHI Milan is an important platform for connecting existing and potential partners, and we look forward to continuing to serve this growing sector of the industry in 2025 and beyond." We have also observed that participants (i.e., contract award parties) want to meet with existing partners and move forward with projects, as well as significantly expand their networks by 2025."