Tuesday, April 10, 2012
The global pharmaceutical industry continues to grow, forcing market leaders to increase respective investments in research and development (R&D), innovation and other core processes. Increasingly, outsourcing is seen as a driver of both cost reduction and process improvement.
Earlier this year, Nice Insight reported that big pharmaceutical companies are currently outsourcing more than biotechnology firms. And this week, research service Frost & Sullivan released a report showing a major leap in contract manufacturing outsourcing (CMO) in the U.s. pharmaceutical sector.
Specifically, the market earned revenues of $10.73 billion last year and estimates this to reach $15.97 billion in 2016, making for a compound annual growth rate (CAGR) of 8.3 percent.
"The continued expansion of the U.S. pharmaceuticals industry and the big pharma's increased outsourcing to improve cost structure and focus on core competencies will significantly augment the market's revenue growth," said Frost & Sullivan consultant Jesse Sullivan. "The pharmaceutical companies that had used their excess capacity during the downturn to retain in-house manufacturing are expected to gradually outsource as the economy improves."
The positive outlook comes even as U.S. firms reported an overall dip in R&D investment between 2010 and 2011. This may slow the pace of pharmaceutical outsourcing in coming years.