The global market for pharmaceutical contract manufacturing (PCM) is expected be worth $20.4 billion this year and will rise to a value of more than $31 billion by 2012, according to a new report.

The USA is the world’s largest PCM market, and revenues there are expected to hit $12.8 billion by 2012, according to the study, by Global Industry Analysts. However, the fastest advances over the period will be reported for the Asia-Pacific region, with a forecast compound annual growth rate (CAGR) of nearly 16%, boosted by its immense manufacturing capacity.

PCM offers a number of strategic advantages for global drugmakers facing increasing competitive pressures, says the report. For example, it can provide them with improved flexibility, faster time to market and lower scale-up costs, enabling them to meet increasing demand for new drugs and focus on their core competencies. Outsourcing also allows companies to reduce excess capacity in their manufacturing networks and restructure their supply chains, while value-added PCM services can meet increased demand for specialised manufacturing capabilities and back-up sources of supply, it says.

Big Pharma favouring China for Asian outsourcing

According to another new study published this month, China is emerging as Big Pharma’s most-favoured PCM location in Asia.

The report, from PricewaterhouseCoopers, forecasts that China and India will continue to spearhead the region’s growth while Singapore will maintain its position as a centre for research and innovation. These three are the region’s outsourcing hotspots, but other nations, particularly Korea and Taiwan, will become increasingly significant, while Japan and Australia are now mature, it says.

The region’s outsourcing activities are now moving up the value chain, with low-cost production being eclipsed by a broad range of drivers of growth, including market potential and R&D capacity, says the study, and it points to three major developments which are shaping outsourcing activities in Asia. First, it says that drugmakers’ previous concerns about the strength of intellectual property protection in Asia are being overcome, and this is driving a trend in the region toward high-end innovation. A second factor is the rapid expansion of clinical trials in Asia, with China now having overtaken India as one of the fastest-growing locations, and third, Asian contract manufacturing organisations are becoming increasingly compliant with international regulatory standards, and this is winning them increasing business from from Big Pharma.