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

As the world’s contract development and manufacturing organizations (CDMOs) meet this week at CPHI Frankfurt, a new analysis — published by De Facto — finds that companies 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.

“CDMOs that differentiate through technology, equipment, and analytical expertise —particularly in RNAi, ADCs, PROTACs, and multi-specific antibodies — will be well positioned,” Scanlan said. “Smaller CDMOs may even hold an edge through niche specialization.”  

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.”

China was on the minds of stakeholders at the Leadership Summit on Tuesday 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 “this year 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 on Tuesday at CPHI Frankfurt, 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 the latest 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.