The Contract Development and Manufacturing (CDMO) has now established itself internationally as a widely used organizational model for the production and development of drugs for third parties in dedicated factories and laboratories with large operational capabilities.
In Italy, a country with an important manufacturing tradition, CDMO – that exists since the ’90 – has developed a lot and today there is a conspicuous presence of these companies. Many of them belong to Farmindustria, where, as soon as in 2009, a special group was formed, that recently took on the new name of “CDMO: specialists in pharmaceutical manufacturing”. The name expresses well the vocation for excellence in this sector. Its presence is a sign of innovation and flexibility for the entire pharmaceutical industry.
Italian CDMO, still first in Europe
An analysis by Prometeia (a study center in Bologna, Italy), at its sixth edition this year, has reconfirmed the leadership role that Italian pharmaceutical CDMO has in Europe. Italy is in fact the first continental producer with 2.3 billion euros of production value (equal to 23% of the approximately 10 billions estimated for the total of Europe). Our country overcomes both Germany (€ 2.1 billion) and France (€ 1.9 billion). Pharmaceutical CDMO plays an important role in Europe and Italy, which is also reflected in the number of people employed in the companies of the sector: 11,500 employees, 90% of which with a degree or diploma.
Compared to 2018, Italy strengthens its share in Europe, with an increase of 0.5, higher than that of Germany (equal to 0.3). As for France, on the other hand, its weight is reduced by 0.7, but the opening of new production plants during 2020 could strengthen its positioning in next year’s estimates.
Injectables and high-tech and biological productions in strong growth
The companies active in Italy have been able to conquer more and more important spaces in the European panorama thanks in particular to investments for development in productions with greater complexity and added value. These productions have supported a strong growth in foreign sales and allowed a constant strengthening of the performance of this sector compared to the manufacturing average.
The growth of the CDMO sector, very lively in 2020, continues in 2021. At the sector level, 2020 saw a strong increase in injectable productions. Furthermore, the double-digit growth in high-tech and organic productions continued.
Organic and high-tech productions have shown a strong expansion over the last decade, reaching almost 20% of the total turnover in 2020, from 5% in 2010. The data also show a strong increase in injectable productions, in particular in the 2020, come to represent 50% of the turnover. The sector shows growth in all its specializations: a positive trend confirmed also in 2021.
A vocation for export
The data testify to the success of Italian pharmaceutical CDMO companies also on foreign markets. The exported turnover has more than doubled in the last decade, raising the share of direct production beyond national borders from 57% in 2010 to levels close to 75% in the period 2020-2021.
A significant contribution to this growth was given by the continuous strengthening of direct sales to advanced markets, such as the United States (which in 2021 will represent 30% of the sector’s overall exports), the EU27 countries (35%), and Japan (4%).
Propensity to invest
A fundamental role in allowing CDMOs active in Italy to strengthen their leadership on the European scene was also played by the constant propensity to invest. In 2021, the ratio of investments to turnover is estimated at 20.1%, with an incidence almost triple compared to the manufacturing average and growing compared to the data for 2020 (14.3%) and 2019 (13.7%). In the period 2020-2021, the cumulative growth of investments will exceed 80%. 2/3 of the total concern the production lines – the core of the sector’s activity – with a net increase in investments in new lines / plants, to signal a further expansion of production capacity.
Particularly high has been, in recent years, the propensity to invest in the digitization of plants and in improving energy efficiency and, in general, in environmental sustainability (waste management, air and climate protection).
The role of the supply chain
In describing the success of the sector, the role of the supply chain should also be emphasized. The high degree of integration with upstream and downstream operators, in fact, allows CDMOs to respond quickly and with a high degree of flexibility and innovation to the requests of end customers. The stability of relations along the supply chain is therefore a strategic aspect for a supply chain which, also considering production inputs, capital goods and specialized services instrumental to production, reaches to activate around 4 billion euros.
New opportunities for CDMO in Italy
The Covid-19 pandemic has made it clear how the maintenance and expansion of the pharmaceutical industrial base is strategic to respond more effectively to emergencies and to structurally strengthen health systems. This year’s survey therefore provided a focus on this issue.
For 80% of companies, the growth of investments in Europe would open up new opportunities both in terms of innovation – of products and processes – and of the market.
In particular, eight out of ten companies declare that strengthening production capacity would increase product innovations concentrated on injectable productions. The expected innovations on organic production and Covid vaccines are also significant. For four out of five companies (81%), process innovation would mainly concern the production lines, but also areas such as plant engineering and packaging. Finally, for three out of four companies (76%) new market opportunities would open: both on the domestic market, for more than half of the companies, but especially abroad, for almost all the companies that participated in the survey, in particular in the EU, the United States and Russia.
Institutions-business partnerships to increase competitiveness
From the Prometeia analysis, therefore, emerges a sector of high quality and development potential, capable of increasing production, employment and exports thanks to the propensity to invest and to be competitive on a global level.
In order to maintain and expand the CDMO’s activity in the coming years, also with a view to consolidating European pharmaceutical production, the partnership between institutions and companies will be strategic to increase the competitiveness of the sector. In this sense, it is essential for companies to be able to count on a stable and clear regulatory framework. It is a fundamental requirement for investments that the decision-making processes of the Public Administration are done in full compliance with international quality and safety standards, but faster and more suitably for innovation and for new technologies, in order to increase the attractiveness of investments in Italy and Europe.
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