2016 Results Summary: A Rising Tide Lifts All Contract Service Boats
The Contract Development and Manufacturing Organization (CDMO) sector enjoyed a strong 2016, with all components reporting robust, albeit uneven, growth. Early-stage companies posted especially impressive results, bolstered by generous external funding, and the API sector continued its recent recovery, especially in the small molecule space (see Figure 1, below).
The impressive top line results do, however, need to be viewed with care for several reasons. For instance, growth in the Contract Research Organization (CRO) sector slowed in the final quarter of 2016, with several companies—including industry leader Quintiles — offering a more cautious outlook for 2017.
In addition, at least half of the 18% reported growth in discovery and development was provided by company acquisitions. In the case of Albany Molecular Research Inc. (AMRI), the acquisition of Whitehouse Labs was responsible for virtually all growth in this segment during fourth quarter 2016.
In contrast, the 6% growth recorded by dose form Contract Manufacturing Organizations (CMOs) was mostly organic, although it’s worth emphasizing that only a small proportion of dose-form CMOs are either publicly traded or part of a larger entity that discloses annual results—notably Patheon, Catalent, Recipharm, Baxter and Pfizer CentreOne. Consequently, extrapolating results from this select group to the dose form market as a whole is a risky exercise.
This article is reprinted from the April issue of Bio/Pharmaceutical Outsourcing Report. The full article addresses the macro-economic background for 2017 thus far. To learn more, click here.