During a recent quarterly earnings call, the head of one of the busiest contract development and manufacturing organizations (CDMOs) warned that in the coming months, biopharma companies will probably cut drug discovery activity. “The lack of a recovery in demand for our biotech clients as well as recently emerging and softening demand trends in our global biopharma client base have caused us to take a much more negative view of our growth prospects for the second half of the year,” said James C. Foster, chairman, president, and CEO of Charles River Laboratories.
(Note: Charles River appears in a “ ” sidebar that accompanies the online version of this article. The company does not indicate how much revenue from its Manufacturing Solutions segment reflects CDMO activity, confounding ’s Top 10 ranking scheme.) Foster also noted that most global biopharma companies have restructuring programs, which are “likely precipitated by the Inflation Reduction Act or pending patent expirations or both.
” Essentially, companies are tightening their budgets and pruning their pipelines. “Revenue for this client base continued to increase in the second quarter; however, proposal activity and bookings began to notably decline and diverge from biotech clients during the second quarter,” Foster explained. “Because of this, the second half revenue growth that we previously anticipated will not materialize.
And in fact, demand is expected to continue to soften for global biopharmaceutical clients in the near term. “We expect that these actions and the resulting softening of our demand key performance indicators will continue to cause a period of slower spending by large pharma companies on their early-stage drug development activities, particularly because they are more focused on their clinical pipelines at this time. This is a pretty unexpected and rapid deterioration of the large pharma companies’ business.
” That downturn was not apparent , as seven of the companies ranked among ’s top 10 CDMOs grew revenue (two saw declines; one stayed flat). The combined 2023 revenue of the top 10 CDMOs rose 7% from 2022, climbing from $28.22 billion to $30.
237 billion. Indeed, a more optimistic forecast for CDMOs emerged July 29 from a survey by Jefferies of 25 biopharma clients of CDMOs. The survey showed growing demand for emerging modalities (including peptides, antibody-drug conjugates, radioligands, oligonucleotides, and cell and gene therapies) and identified two “headwinds” (or challenges to companies planning CDMO activity): raising financing and navigating regulatory delays.
Another finding from the survey concerned the proposed BIOSECURE Act (U.S. House of Representatives bill ; U.
S. Senate bill ), which would companies on national security grounds. The act is expected to drive more business to CDMOs outside China.
Finally, the Jeffries team, led by James Vane-Tempest, Head of European Healthcare Research, noted that Lonza “is a clear potential industry winner.” But without further ado, here is this year’s Top 10 A-List of CDMOs. The companies are ranked by 2023 revenues, as disclosed by the companies in regulatory filings or in responses to ’s queries.
Several of the CDMOs also furnished quarterly or half-year revenues for 2024..
