CDMOs in China and US are forecast to see fastest growth: analysis

An analysis — published by De Facto — finds that contract development and manufacturing organizations (CDMOs) in China and the United States are best positioned to capitalize on outsourcing trends.

The analysis from Brian Scanlan, advisor of life sciences at Edgewater Capital Partners, predicts that CDMOs in China and the U.S. will experience the fastest growth, with antibody-drug conjugates (ADCs), monoclonal antibodies (mAbs), proteolysis targeting chimeras (PROTACs), and sterile filling anticipated to drive demand in 2026.

“My advice to CDMOs is to evaluate how their capabilities align with emerging industry needs by following drug substance and drug product trends from early preclinical through early clinical development,” Scanlan said. “CDMOs that differentiate through technology, equipment, and analytical expertise — particularly in RNAi, ADCs, PROTACs, and multi-specific antibodies — will be well positioned. Smaller CDMOs may even hold an edge through niche specialization.”

Global outsourced commercial manufacturing demand remains stable, sustained by consistent new drug launches, and CDMOs focused predominantly in clinical and commercial phase services have performed better in 2025, the report found. While some large CDMOs have benefited from significant GLP-1 revenues, oncology appears to offer greater growth potential for mid- and small-scale CDMOs, according to the report. Overall, for CDMOs focused on clinical activities, demand remains stable, with the report forecasting a return to higher growth in 2026.

“The interesting part for me, as competition for opportunities increases, is whether CDMOs have adapted to the technologies emerging from the pipeline — PROTACs, oral peptides, tri-specifics, ADCs, and so on — and whether they’ve gone to market successfully with these capabilities,” said Alex Heeley, managing partner at De Facto.  

Fueled by the Trump administration’s push toward domestic pharmaceutical manufacturing, Scanlan notes that U.S. CDMOs “may benefit in the short term by bridging the 18-36 month gap before new facilities come online, though engagement appears limited to larger, integrated sites in biologics and aseptic filling as of now.”

Scanlan contends that U.S. CDMOs should see “steadier” demand from emerging and mid-sized pharma, while questions remain around shortages in technical talent given the added demand and infrastructure expected.

At the same time, China has emerged as a major hub of CDMO, drug innovation, and biotechnology in a bid to rival the U.S., as Chinese CDMOs are focused on increasing activity to support its domestic market.

“With growing R&D output and global dealmaking, China is challenging the U.S.’s long-held biotech leadership — reshaping CDMO dynamics and global supply chain strategies,” Scanlan wrote. “Chinese firms stand to gain from both increased China-based innovation and continuing Western-based business albeit at some reduced level.”

When it comes to development, CDMOs in the U.S., European Union, and India are expected to see rising demand from Western innovators, according to the report. However, Western CDMOs may be hit with increasing drug pricing pressure from pricing reforms, while Indian CDMOs are likely to retain stronger pricing leverage and remain well positioned, the report said.

China was on the minds of stakeholders at the Leadership Summit in October 2025 at CPHI Frankfurt. During a panel, Ronald Piervincenzi, CEO of U.S. Pharmacopeia, called out the fact that the U.S. supply chain for key starting materials (KSMs), the building blocks for active pharmaceutical ingredients (APIs), is at risk due to America’s reliance on countries such as China.

Piervincenzi told the panel that China is the sole supplier of at least one KSM for 679 APIs, accounting for 37% of all APIs, according to U.S. Pharmacopeia.

Geopolitical tensions, FDA cuts

At CPHI 2024, the mood was “cautiously optimistic as the post-COVID CDMO recession was finally loosening its grip,” according to Scanlan. However, he observes CPHI 2025 “has brought a mix of macroeconomic recovery and geopolitical curveballs: U.S. tariffs, executive orders, FDA shakeups, and NIH funding cuts.”

In a CDMO panel session at CPHI Frankfurt in October 2025, stakeholders discussed — among other issues — how geopolitical tensions are disrupting supply chains, making regional diversification and de-risking strategies more important than ever.

Gil Roth, president of the Pharma & Biopharma Outsourcing Association (PBOA), acknowledged in the session that CDMOs are at a crossroads due to current market conditions. Roth told the panel that he worries about the impact of certain U.S. government policies beyond just tariffs and the drive toward onshoring.

“The future of the FDA is something I spend my time worrying about,” Roth said. “If the FDA is put under significant stress due to job cuts and funding issues, that could potentially impact drug review timelines. And, if that happens, all of this gets blown up. That’s what I really get concerned with because if investors can no longer trust in user fee goal dates for review timelines, maybe they find somewhere else to invest.”

In his analysis, Scanlan finds that FDA policy shifts under the Trump administration have been more aggressive and less predictable, potentially impacting CDMO demand and approval timelines. While the 3,500 FDA staff reduction in April has raised concerns about review delays at the agency, he points out that approval rates remain near their 2024 levels as of September.

In an episode of Pharma Manufacturing’s Off Script podcast, Senior Editor Andy Lundin speaks with Scanlan about the CDMO industry’s pivotal financial and strategic juncture — shaped by constrained funding, shifting demand, and renewed investor scrutiny.