Being part of today’s Contract Development and Manufacturing Organization (CDMO) industry feels significantly different to two decades ago, when I began my professional career as a chemist. Back then, CDMOs were referred to as Contract Manufacturing Organizations (CMOs), and the concept of contract manufacturing as a business model was just starting to take shape. At that time, the tasks of chemists were often relatively rigidly defined and primarily limited to the implementation of existing processes – innovative impulses were less in demand.
Since the 1990s, as pharmaceutical companies sought to consolidate and focus on their core value-generating competencies, a lot has changed. While the CDMO sector has evolved into a substantial industry in its own right, the profile of its scientists and their competencies has also transformed. Today, there are more than a thousand companies worldwide offering highly differentiated services to global pharmaceutical firms, generating more than US$180 billion revenue and employing tens of thousands of scientists (1).
Unlike any other industry, the global healthcare supply chain has become a worldwide and yet vulnerable network, consisting of highly diversified nodes that span the entire globe. CDMOs today are playing an irreplaceable role in this network by providing unique expertise to the collaboration with innovative pharmaceutical partners.
Diversification and unique selling propositions of today’s best known CDMO organizations are often rooted in their history (2).
Stepping back into the history of CDMOs
Outsourcing certain activities, such as manufacturing intermediates and Active Pharmaceutical Ingredients (APIs), was once the exception rather than the rule. In the 1980s, major firms still managed most operations internally (3). Ten years later, two significant and interconnected trends began to emerge that laid the groundwork for today’s CDMO industry.
Firstly, companies like Lonza and Patheon began to expand and strengthen their positions in the contract manufacturing sector through strategic advancements and acquisitions (2, 4, 5). Secondly, substantial upheavals in the chemical and pharmaceutical industry landscape led to the formation of numerous new organizations and the transfer of assets to companies like those mentioned above.
A well-known example is the former Hoechst AG, which had a broad product portfolio, producing everything from chlorine and caustic soda to pharmaceuticals. Until its dissolution in the late 20th century, the company’s logo featuring a bridge was recognizable in pharmacies worldwide. After Hoechst fragmented, most of its assets were transferred to successor companies (6). The pharma sector merged with Rhone Poulenc to form Aventis and further developed into today’s Sanofi. As part of a consequent consolidation strategy, Sanofi recently divested EUROAPI in 2022, giving rise to one of the larger CDMO and API manufacturing platforms in Europe (7).
Another notable example of how CDMOs evolved from pharmaceutical companies is Evonik’s Drug Substance business, which originated in Degussa’s innovative pharmaceutical division, Asta Medica. Although the Asta Medica name has disappeared, its assets and services were repurposed as CDMO offerings. To enhance manufacturing capabilities and elevate Degussa`s profile, the UK-based fine chemical company Laporte was acquired in 2001. The acquisition of Eli Lilly’s large-scale Tippecanoe facility and its conversion into a multi-customer full-service site, was an additional strategic step to further expand the presence of a significant Western CDMO, especially in the fields of fermentation-based active pharmaceutical ingredients and highly potent APIs (8).
Cost-saving initiatives
Driven by cost-saving initiatives, outsourcing production and research activities increased in the 2000s, particularly to Asia, leading to rapid growth of companies like WuXi. Fueled by this financial influx as well as a growing scientific community in China, (9) companies over the years have invested and expanded in many new and innovative technologies.
The cost saving trend peaked in the years following the financial crisis of 2008, which resulted in budget cuts and hiring freezes that affected an entire generation of chemists and engineers, forcing them to seek employment in other fields.
Meanwhile, investors recognized the CDMO industry as an appealing opportunity. Private equity funding enabled CDMO firms to expand, acquire freed-up assets from pharmaceutical companies, and hire talented scientists, infusing fresh ideas and innovation into these companies.
At this point, CDMOs were no longer just service providers for pharmaceutical companies. They had become vital organizations with their own strategic ambitions, intellectual property and scientists working at the forefront of innovation.
CDMOs as a business opportunity
The CDMO landscape started to present a diverse array of opportunities to chemists, particularly the chance to learn and shape many different scientific, technical and commercial domains. Today, many esteemed experts in the industry have their roots in the CDMO sector and CDMOs have established their own, proprietary technologies.
As a result, CDMOs were enabled to significantly contribute to the rapid development of new pharmaceuticals and even whole classes of therapies.
For instance, the urgent need for a vaccine during the COVID-19 pandemic intersected with a vibrant ecosystem of companies that were able to leverage their respective strengths to address this massive challenge. These efforts ultimately contributed to the success of products from Pfizer, BioNTech, Moderna, and others (10, 11).
Similarly, the emergence of new modalities such as antibody conjugates or mRNA, which require a diverse range of competencies for market readiness, benefits immensely from the ability to source these competencies from a variety of partners.
One example is Lonza’s role in the development of monoclonal antibodies which leverages their proprietary expression and cell line technologies (12).
CDMOs have also secured leading market and technology positions in the drug product space. Evonik’s advanced polymer technologies for oral and parenteral formulations and Catalent’s advanced bioavailability solutions are prime examples.
The industry is also committed to sustainability, with many CDMOs adopting green chemistry principles and circular economy models, recognizing that sustainability drives value for their customers.
The CDMO supply chain – global vs local
While the global setup and technological differentiation of CDMOs allows for fast, efficient and cost-conscious development and commercialization of drugs, there are also challenges posed by geopolitical changes. Today, many of our customers are demanding a globally diversified supply chain with at least one footprint in the western hemisphere. The discussion about “reshoring” drugs has gained momentum with the public in recent years. Concerns surrounding tariffs and trade have recently prompted many to adopt “U.S. only” or “Buy European” strategies. There are also other risks associated with becoming dependent on third parties, and in some cases, entire contract manufacturers are being acquired to regain control over particularly critical activities, and technological expertise.
Strategic partnerships and complex supply chains that have taken years to build are now being questioned. This could have unknown consequences for the entire pharmaceutical industry and the patients it serves. At the same time, new partnerships and ways of working together are being formed. For example, governments in many countries are now working to produce critical products domestically. A strong push in this direction is due to the lessons learned from the COVID-19 pandemic, as well as government investments in local manufacturing and the development of all necessary skills locally, which provides again new opportunities for scientists.
Looking into the crystal ball
The CDMO industry has been navigating challenges since it began, and so have the chemists that shaped it. Today, we are again at an important turning point. It is our responsibility to set the right course, promote technological innovation and sustainability, and support robust growth as an independent industry.
I believe that the future of CDMOs is in technical know-how and innovation.
It will be critical to align with current major trends in sustainability and artificial intelligence
Advanced and more sustainable manufacturing technologies introduced by CDMOs will positively influence the carbon footprint across the entire industry. By leveraging AI-supported closed-loop optimization and related technologies, process development and hence time to market will be accelerated and ultimately, more resource efficient processes will be scaled.
Furthermore, the application of AI in route scouting and sourcing will play a crucial role in shaping supply chain dynamics and influencing the selection of CDMOs throughout the value chain.
Innovation will allow CDMOs to expand into new areas and respond quickly to emerging fields, such as personalized medicine – and help covering unmet medical needs even faster. Hence, CDMO contribution is very likely to gain further importance.
What will a scientist’s profile in the CDMO industry look like in 20 years? We can’t look into the future. But what’s certain for the next generation of chemists is that the CDMO industry will not be standing still any time soon.
References and notes
- Precedence Research https://www.precedenceresearch.com/pharmaceutical-cdmo-market [Accessed 26.03.2025]
- https://www.chemanager-online.com/en/news/evolution-cdmos [Accessed 26.03.2025]
- https://www.pfizer.com/about/history [Accessed 26.03.2025]
- https://www.lonza.com/about-us/our-history [Accessed 26.03.2025]
- https://www.pharmasalmanac.com/articles/patheon-acquired-by-thermo-fisher-scientific [Accessed 27.03.2025]
- Seifert, Karl-Gerhard. Goodbye Hoechst: Von Könnern, Spielern und Scharlatanen. 3rd ed., Societäts-Verlag, 2019. ISBN 978-3-95542-321-6
- EuroAPI is ready to emerge from Sanofi’s shadow, April 16, 2022, Alex Scott, C&EN, https://cen.acs.org/business/outsourcing/EuroAPI-ready-emerge-Sanofis-shadow/100/i13 [Accessed 26.03.2025]
- Acquisitions are more than assets – people and culture are key https://www.evonik.com/en/news/news-stories/2024/acquisitions-are-more-than-assets—people-and-culture-are-key.html [Accessed 26.03.2025]
- JOURNAL OF SIMULATION, VOL. 5, NO. 2, May 2017
- J The Race to Develop the Pfizer-BioNTech COVID-19 Vaccine: From the Pharmaceutical Scientists’ Perspective, Pharm Sci. 2022 Sep 18;112(3):640–647. doi: 10.1016/j.xphs.2022.09.014 [Accessed 26.03.2025]
- https://healthcare.evonik.com/en/start-of-production-in-record-time-evonik-delivers-first-lipids-from-german-facility-to-biontech-157220.html [Accessed 26.03.2025]
- https://www.lonza.com/-/media/Lonza/knowledge/Licensing/23_biologics_Pharma_Tech_Outlook_Article_Digital_final.pdf [Accessed 27.03.2025]
