The global biologics and ATs industry closed out 2023 with a 4% decline from the $436B recorded in 2022 to $417B. This decrease was primarily influenced by reduced demand for biologics in specific therapeutic areas, notably mRNA vaccines, with sales plummeting by 69% from $60.8B in 2022 to $18.6B in 2023.

The high expectations for growth in 2023 were further overshadowed by a rapid deterioration of the macroeconomic landscape. This included significant interest rate hikes and an acceleration in drug shortages, driven by a combination of lingering pandemic-related supply chain disruptions and escalating input costs placing a burden on manufacturers.

Despite this decline, the global biologics and ATs industry has continued to innovate across high-demand service areas. In 2023, the oncology and metabolic disorders therapeutic areas experienced continued growth, driven by both an increase in new drug approvals and the expansion of indications for existing therapies, enabling their use in broader patient populations. Oncology remained the therapeutic area with the most clinical trial activity in 2023, with notable advancements in gene and cell therapies such as chimeric antigen receptor T-cell (CAR-T) and natural killer cell therapies.

This surge in activity for selected therapeutic areas presents significant opportunities for both small and large CDMO players to contribute to the advancement of biologics and ATs in the coming years.

Regional Trends and Capabilities in North American and European Biologics and ATs CDMO

European CDMOs are at the forefront of biologics and ATs manufacturing, with the market estimated at $13.6B in 2023. Major players in this landscape offer comprehensive solutions throughout the product development lifecycle, including extensive manufacturing skills and upstream and downstream expertise. However, there is a notable scarcity of in-house cold chain logistics capabilities in this market. The footprint of biologics and ATs CDMOs across Europe varies significantly due to differing economic environments and historical manufacturing skills. These CDMOs are increasingly diversifying their service offerings through mergers and acquisitions (M&A) and expanding into manufacturing emerging therapeutic modalities such as CAR-T cell therapies and oncolytic viruses.

The North American biologics and ATs CDMO market, currently valued at approximately $8.3B, is a dynamic ecosystem shaped by regional strengths and industry specialization. Primarily concentrated on the East Coast, which accounts for 42% of CDMOs and contributes 47% to the total revenue, North American CDMOs often boast broader capabilities and a deeper focus on advanced therapies and provide extensive solutions throughout the development lifecycle, from early-stage development and process optimization to large-scale manufacturing and commercialization.

It is worth noting, however, that the prominence of the Asia-Pacific region will continue to rise despite looming challenges from protectionist policies among developed economies. India and China will maintain their roles as key CDMO hubs, a trend attributed to their comparatively lower labor costs compared to Europe and the US, while Korean and Japanese players are increasingly investing in expanding their biomanufacturing services, making this region attractive particularly for large scale biologics manufacturing.

M&A and Investment Activity in Global Biologics and ATs CDMOs

In 2023, biologics and ATs saw a decrease in the number of deals by 38%, from 42 in 2022 to 26 in 2023. Notably, more than half of the identified deals had cross-border connotations involving players from the US, Europe, and Asia, indicating a continued willingness for opportunistic collaboration among global players.

In the first half of 2024, the biologics and ATs CDMO market saw 11 M&A deals, with two being private equity-backed, reflecting selective interest from financial sponsors. However, CDMOs are actively positioning themselves to capture new growth opportunities, driven by the recent wave of cell and gene therapy approvals in 2023. Anticipating a surge in demand for commercial manufacturing of these advanced therapies, CDMOs are proactively making strategic investments to expand their capacity and capabilities to support the expected commercialization of these therapies.

Conclusion

Looking ahead, the biologics and ATs CDMO market remains poised for growth, driven by continued investments in biologic and advanced therapy R&D, strategic expansions, and acquisitions. Established players are expected to strengthen their capabilities and geographic reach, while new entrants will focus on specialized services and innovation to gain a foothold. Regional dealmaking will re-surge, especially in North America and Asia-Pacific, as companies prioritize nearshoring and capacity expansion to enhance supply chain resilience and support the increasing demand for biologics.

Download the 2024 Biologics and Advanced Therapies Contract Manufacturing Report for more in-depth insights on the industry landscape and its major players.