In an exclusive interview with Contract Pharma, Andreas Raabe, CEO of Adragos Pharma, reveals three key trends that will redefine the contract development and manufacturing organisation (CDMO) industry in the future. Below is a summary of the interview, highlighting the key changes expected in 2024 and beyond.
1. Slowdown for biopharmaceuticals and cell & gene therapies
The initial wave of enthusiasm for biotherapeutics and cell and gene therapies (CGTs) is encountering significant turbulence. Previously deemed as the next big leap in medical innovation, these therapies attracted substantial investments as companies clamored for dominance. However, as Raabe explains, the expected market supremacy has not come to fruition. Market conditions are changing with demand and prices falling sharply, forcing many companies to rethink their strategies. Companies that initially invested heavily are now being forced to adapt their business models to these new realities, signalling a period of consolidation and strategic realignment in these once highly touted areas.
2. On-shoring, near-shoring, and friend-shoring
The COVID-19 pandemic exposed the vulnerabilities of global pharmaceutical supply chains, particularly those heavily dependent on India and China for raw materials. The disruption to supply chains exposed the risks associated with such dependencies and prompted a strategic shift. According to Raabe, there’s a growing emphasis on ‘friend-shoring’, reducing reliance on geopolitical adversaries such as China by diversifying sources and moving production closer to home or within allied countries. This trend is not only about ensuring logistical efficiency, but also about increasing the resilience and security of pharmaceutical supply against geopolitical uncertainties.
3. Big may not be so beautiful after all
In the CDMO world, size has always been a key factor – with larger companies dominating the market through superior margins, priority access to innovation and formidable resources to fend off competition. However, as Raabe suggests, this era may be coming to an end. Large CDMOs are struggling with quality, operational and sales challenges, while smaller, more agile companies are gaining ground through innovation and adaptability. However, these smaller companies often lack the scale to compete on a large scale. Raabe highlights the emergence of a ‘sweet spot’ in mid-sized CDMOs, which combine the agility and innovative edge of smaller companies with the scale and resources of their larger counterparts. This balanced approach positions them to better compete, adapt and capitalise on new opportunities in the industry.Andreas Raabe’s insights provide a strategic lens through which industry stakeholders can navigate the evolving landscape of the CDMO sector. By understanding and leveraging these key trends, companies can better prepare for the changes and challenges that lie ahead in 2024 and beyond.
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