ASEAN Contract Development and Manufacturing Organization (CDMO) Market Size, Share & COVID-19 Impact Analysis, By Services [CMO, {API Manufacturing, Finished Product Manufacturing, (Solid Dosage Forms, Injectables, Others), Packaging}, CRO, (Discovery, Preclinical, Clinical, and Laboratory Services)], and Country Forecast, 2021-2028

The ASEAN contract development and manufacturing organization (CDMO) market size was USD 9.43 billion in 2020. The market is projected to grow from USD 10.91 billion in 2021 to USD 22.53 billion in 2028, reflecting a CAGR of 10.9% during the 2021-2028 period.  The impact of COVID-19 has been unprecedented and staggering, with the market witnessing a positive impact on demand across ASEAN countries amid the pandemic. Based on our analysis, the ASEAN CDMO market exhibited a higher growth of 16.5% in 2020 as compared to the average year-on-year growth during 2017-2019. The growth in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

A CDMO is a company/organization that serves other companies on a contract basis to provide category services from medication development to drug manufacturing for various therapeutic applications. Small-sized companies that lack manufacturing capabilities in the development of new drugs are mostly served as an end user by these CDMOs. The growing outsourcing trend by large and small pharmaceutical companies denotes a favorable opportunity for the CDMOs. As pharmaceutical drug development shifts its focus to more research and development and less in-house manufacturing, ASEAN contract development and manufacturing organization will have enormous opportunities to flourish.

The ASEAN CDMO industry is poised to experience lucrative growth across the ASEAN countries, owing to lower manufacturing costs and tax incentives. During recent years, the pricing pressure in the developed economies such as the U.S., Europe has driven manufacturing contractors to schedule operations in emerging economies. Outsourcing has resulted in companies establishing facilities in China, Singapore, India, South Korea, and more recently, Malaysia. Significant investments are being made in the ASEAN economies, with several western CDMOs expanding operations in these countries. As the pharmaceutical manufacturing industry becomes more price competitive, the option to outsource certain projects to lower-cost Asian regions, particularly for producing large volume products, will become a valuable option. For instance, in August 2017, the U.S. biopharmaceutical company AbbVie Inc., opened a biologics manufacturing facility plant at the Tuas Biomedical Park in Singapore. Hence, such factors will strongly support the growth of the ASEAN CDMO industry.

Increasing Research and Manufacturing Contracts for COVID-19 Vaccines to Reflect a Surge in Market  amidst Pandemic

The COVID-19 pandemic is a major health challenge across the globe. After its outbreak was detected in China, the effects of the pandemic are being felt around the world. The healthcare industry felt a significant impact on its revenue growth. However, the ASEAN contract development and manufacturing organization industry experienced a positive spike in its evolution during the year 2020. The sudden rise in the annual growth rate is due to increasing demand for COVID-19 vaccines. This has led to several companies contracting with CDMOs for the efficient development of these drugs. For instance, in April 2021, Moderna, Inc. and Catalent, Inc. announced the expansion of their strategic collaboration to dedicate a new high-speed vial filling line for the development of the Moderna COVID-19.

Even though ASEAN CDMO experienced positive growth in 2020, however, there were disruptions brought by COVID-19. For instance, contract development and manufacturing companies found it necessary to achieve higher levels of safety, to quickly shift production priorities, and to coordinate more closely with clients. Furthermore, during the initial peak period of COVID-19, clinical trials were completely paused, for the time being, thus hampering the sales revenue of the ASEAN contract development and manufacturing organization industry during the initial months of 2020. Despite this, the growing demand for gene-based therapeutics and vaccines has doubled the number of clinical trials being conducted post initial lockdown.

Revenues of major companies such as Lonza and IQVIA that operate as a CDMO organization and have a significant presence in the ASEAN economies have witnessed a positive growth trajectory in FY 2020 from FY 2019. Asia Pacific region, including ASEAN countries, is expected to show significant growth during the analysis period. The key companies of the market are adopting various business strategies to sustain their business in the course of this catastrophic situation.

LATEST TRENDS

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Growing Consolidation in CDMO Industry is a Market Trend

The most prevalent trend witnessed in the ASEAN contract development and manufacturing organization market is the growing consolidation through mergers and acquisitions among small and major industry players. The pharmaceutical CDMO industry is still highly fragmented in nature, with several global and local companies. The primary factor for the fragmentation is the fact that various players are privately held or are part of private equity firms’ portfolios. However, the scenario is rapidly changing, with the CDMO sector receiving a lot of attention from large global strategic investors. The industry is witnessing a trend of consolidation in the past few years.

According to an article published by Ernst & Young Global Limited, since 2012, mergers and acquisition activities within the industry have clearly been on the rise. The number of publicly announced global CDMO deals increased by approximately 12% per year.

In February 2021, ICON plc, a global provider of outsourced drug and device development and commercialization services, announced a definitive agreement to acquire PRA Health Sciences, Inc. for USD 12 billion. With this acquisition agreement, ICON plc can further penetrate the ASEAN economies such as Singapore, where PRA Health Sciences has a significant presence.

DRIVING FACTORS

Increasing Efforts by the Governments of ASEAN Countries to Boost Pharmaceutical Research and Manufacturing

Growing support from the ASEAN government to augment pharmaceutical research and manufacturing in countries such as Singapore, Malaysia, Thailand, and few others will offer lucrative growth opportunities for the contract research and development of novel drugs. For instance, the Singapore government has been investing in R&D efforts since the early ’90s, starting with a USD 1.5 billion budget for its National Technology Plan in 1995. The Singapore government initiated the Research, Innovation, and Enterprise (RIE) Plan, under which in the last five-year the Singapore government invested USD 16 billion over 2011 to 2015 to make Singapore one of the leading research and development (R&D) hubs.

The government has been sustaining its commitment to research, innovation, and enterprise and has further invested USD 19 billion for the RIE2020 Plan from 2016 to 2020. Such initiatives have resulted in new drugs and devices being manufactured in these research institutes, thus boosting growth opportunities for the CDMOs.

Ongoing U.S.-China Trade War to Shift Contract Manufacturing in ASEAN Economies   

The ASEAN economies are anticipated to witness lucrative growth opportunities during the analysis period. In terms of the CDMO industry, the ASEAN countries such as Malaysia, Indonesia are comparatively underpenetrated. This factor offers lucrative opportunities for the Global leaders to enter the market and establish their operations, thus augmenting ASEAN contract development and manufacturing organization market growth. Furthermore, International trade has become acute in the past years, with a bigger share of country GDPs biased towards exports and imports. Moreover, the ongoing trade wars between the U.S. and China have extreme consequences on other countries.

However, Asian nations are striving to grasp opportunities evolving from the trade war, mainly ASEAN countries and India, which are trying to augment their trade impression in the global supply chain. With an aim to mitigate tariffs, contract manufacturers are looking at opportunities in ASEAN and India to relocate capacities.

A huge proportion of exports may shift from China as a result of the U.S. and Chinese tariff hikes. The increasing efforts of the ASEAN economies on building a robust supply chain, coupled with regional connectivity initiatives and the corporate tax structure in Indonesia, Malaysia, and Vietnam being at par with that of China, makes these destinations natural alternatives.

RESTRAINING FACTORS

Limited Regulatory Compliance to Restrict Market Growth  

The ASEAN countries are considered to be the potential economies for the CDMO market to grow, owing to their less expensive manufacturing and research abilities. However, despite major recent progress, regulatory alignment is still holding back international export potential in some parts of Southeast Asia. Countries such as the U.S. and major European economies require facilities accredited with either EU-GMP standards or standards of the Pharmaceutical Inspection Co-operation Scheme (PIC/S-GMP). In terms of ASEAN economies, a limited number of companies have obtained the EU-GMP or PIC/S-GMP standards, thus restricting the market growth.

For instance, as per the CPhI South East Asia Report 2020, in the case of Vietnam, only 17 facilities have obtained EU-GMP or PIC/S-GMP standards, compared to 222 facilities with the lower-level WHO-GMP standards. Moreover, this also prevents sales access to domestic hospitals with tier 1-2 generics required to be manufactured to EU-GMP or PIC/S-GMP standards, thus limiting the market growth.

SEGMENTATION

By Services Analysis

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CMO Segment to Hold Highest Market Revenues

Based on service type, the ASEAN market is segmented into CMO and CRO segments.

Based on category service type, the CMO segment accounted for the highest market share in 2020 and across the forecast period.  High stakes of the segment are majorly attributable to the increasing number of contract manufacturing deals across the ASEAN region. The manufacturing cost across the ASEAN countries is comparatively lower than the U.S. and Europe, thus attracting several pharmaceutical companies to outsource their drug substance and drug products manufacturing in the ASEAN economies. Furthermore, trade incentives offered by the ASEAN countries to attract foreign investments are another significant factor boosting demand for ASEAN CMOS.

An increasing number of European countries entering the ASEAN market due to economical manufacturing abilities compared to the western countries and the presence of low-cost manpower in the region will further stimulate segmental growth.

The API segment, a sub-segment of CMO services, is anticipated to hold huge shares across the analysis timeframe and witness lucrative growth. Increasing support from the private and public sectors to enhance contract manufacturing is one of the prominent growth factors of the active pharmaceutical ingredient segment.

CRO Segment to Witness Highest Growth Rate

The high growth of the CROs in the ASEAN region is primarily due to increasing contract research in Singapore. The country has a mature and well-developed pharmaceutical market. With a reputation for innovative manufacturing and high-quality services, ASEAN countries such as Singapore can attract foreign investments in contract research. ASEAN countries are emerging as a leader for clinical trials. For instance, Thailand is emerging as a central location for large multinational companies such as Novo Nordisk and Boehringer Ingelheim to conduct more and more of their global trials in the country. This is majorly due to the presence of a large treatment-naïve patient population found in the country, including many different disease profiles.

The clinical segment, a sub-segment of CRO services, held maximum revenues as this phase of the drug development process involves the highest investment value. Furthermore, the increasing trend of New Molecular Entity (NME) development will further increase segmental value. Small-medium size companies with limited research infrastructures tend to hire CROs for the rapid growth of such drugs.

REGIONAL INSIGHTS

Based on country/sub-region, the ASEAN market can be segmented into Thailand, Singapore, Malaysia, Indonesia, Philippines, Vietnam, and the rest of ASEAN.

The market size in the ASEAN region stood at USD 9.43 billion in 2020, and the region is expected to witness strong growth trends during the forecast period.

In terms of countries, Singapore is expected to account for the highest market revenue share in 2020. The increasing number of multinational companies selecting Singapore as the research hub for outsourcing clinical trials has significantly led the country to hold the highest market share in 2020 and across. The availability of developed infrastructure, coupled with highly skilled research professionals in the country, has attracted a larger number of companies to contract out their clinical research in Singapore.

Thailand, on the other hand took second position in the ASEAN contract development and manufacturing organization industry in 2020. The country is anticipated to witness a significant growth rate across the analysis period. The country's high growth is due to increasing initiatives by the government to enhance its pharmaceutical industry and healthcare infrastructure, thus boosting demand for contract manufacturing.

Other ASEAN countries such as Malaysia, Indonesia, Philippines, Vietnam, and the rest of ASEAN are estimated to witness substantial growth across the forecast period. This is due to the fact that contract manufacturing services across these countries are less expensive compared to the western economies, thus attracting a larger customer base.

KEY INDUSTRY PLAYERS

Major Players Are Adopting the Trend of Consolidation in the ASEAN Contract Development and Manufacturing Organization (CDMO) Industry

The ASEAN contract development and manufacturing organization (CDMO) industry is fragmented, with several companies operating in the market. However, the industry is witnessing a shift in consolidation, with major players such as Lonza, Catalent Inc, Samsung biologics, and few others dominating the CMO ASEAN market. The coalition is primarily due to the increasing number of merger and acquisition deals adopted by major players to eliminate competition and thus augment its market share.

Furthermore, the CRO industry in the ASEAN region is dominated by players such as Parexel International Corporation, IQVIA, PPD International, and few others. The ASEAN economies are at the developing stage in terms of contract development, thus offering lucrative growth opportunities for the foreign companies to penetrate the market and thereby boost ASEAN contract development and manufacturing organization market share.

LIST OF KEY COMPANIES PROFILED:

• Lonza (New Jersey, U.S.)


• Catalent, Inc. (New Jersey, U.S)


• PRA Health Sciences (North Carolina, U.S.)


• Pfizer Inc. (Pfizer CentreOne) (New York, U.S.)


• Thermo Fisher Scientific Inc. (Patheon) (Massachusetts, U.S.)


• Vetter Pharma. (Ravensburg, Germany)


• Almac Group (County Armagh, Ireland)


• CSI Medical Research (Jurong, Singapore)


• Esco Aster (Changi, Singapore)

KEY INDUSTRY DEVELOPMENTS:

• April 2021 –Lonza and Junshi Biosciences announced to expand their collaboration for biologics development and manufacturing.


• February 2020 – ICON Plc announced that it has entered into a definitive agreement to acquire PRA Health Sciences valued at approximately USD 12.0 billion.

REPORT COVERAGE

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The ASEAN CDMO market research report provides detailed market analysis and focuses on key aspects such as the insights: growth drivers, overview: biggest brands & companies, and key industry developments. Additionally, it includes an overview of the regulatory scenario for ASEAN countries, key services provided by major players, major animal drugs ASEAN contract development and manufacturing organization, and the impact of COVID-19 on the ASEAN CDMO business. Besides these, the report offers insights into market trends and highlights key strategies by key players.

Report Scope & Segmentation