Press Release

Foreign Investment in Asian Contract Manufacturing Organizations Encouraged by Better Quality Standards and Cost Advantages


May 21st, 2012

Global Information Inc. would like to present a new market research report, "Contract Manufacturing Organizations to 2018 - Cost Advantages and Improving Quality Standards Build Confidence and Encourage Foreign Investment in Asian CMOs" by GBI Research.

Leading business intelligence provider, GBI Research, has released its latest report, "Contract Manufacturing Organizations to 2018 - Cost Advantages and Improving Quality Standards Build Confidence and Encourage Foreign Investment in Asian CMOs" which provides key data, information and analysis of Contract Manufacturing Organization (CMO) industry. The report provides a comprehensive insight into the size of the CMO market, and includes forecasts, key reasons for outsourcing, market characterization of CMOs, profiles of top CMOs, regulatory frameworks, drivers and restraints and deals analysis.

This report is built using data and information sourced from proprietary databases, primary and secondary research and uses in-house analysis from GBI Researchs team of industry experts.

Global CMO Market is Poised for Impressive Growth

GBI Research suggests that the global Contract Manufacturing Organizations (CMO) market will grow steadily because the outsourcing of pharmaceutical production by the Western pharmaceutical companies has increased a lot to the Asian countries. The market value of global CMO market was approximately at $26 billion in 2010. This global CMO market grew at a Compound Annual Growth Rate (CAGR) of 10.7% over 2008, when the market was approximately $21.2 billion. Increase in the biologics and generic manufacturing is the main factor which is driving the market. The market is forecast to reach approximately with a value of $59.9 billion by 2018. The global CMO market will grow approximately at a CAGR of 11% between 2010 and 2018..

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Cost Advantages and Improving Quality Standards Encourage Foreign Investment in Asian CMOs

There is increasing demand for CMO services globally. The fastest growing countries in this sector  namely, India and China  have witnessed drastic changes in their government and regulatory policies to favor pharmaceutical outsourcing. Accordingly, these governments have also started introducing sanctions favoring CMOs in order to increase business and attract foreign clients. For example, in 2005 the Indian Biotechnology Policy issued a lot easier process for regulatory clearance (single window clearances) along with the exemptions from import duties and service taxes, which is encouraging the foreign investments within the country. Also in January 2005, the introduction of the new patent rule in India encouraged many multinational pharmaceutical companies to outsource their manufacturing units here protected by Intellectual Property Rights (IPRs). The amendment of the Schedule Y article allows parallel phase clinical trials to be conducted along with reduced custom duties on the samples of clinical trials, which are being imported. In China the State Food and Drug Administration (SFDA) has clearly stated contract manufacturing as a long-term goal for the countrys economic growth. In early 2001, Article 13 of the new edition of the "Drug Administration Law" was issued. According to this a drug manufacturer, authorized by the drug regulatory department which is under the State Council, may produce drugs only after getting approval of the drug regulatory department. The availability of adequate numbers of current good manufacturing practices (cGMP)-compliant manufacturing sites in the Asian region make India and China popular outsourcing destinations of choice for CMOs.

Eastern Europe Offers Better IPR Protection Compared to Other Emerging CMO Destinations

GBI Research finds that most of the countries in Eastern Europe offer superior IPR protection compared to other emerging CMO markets. The Eastern European nations have strong Intellectual Property (IP) protection and enforcement frameworks and witness fewer instances of IPR violation, unlike their Asian counterparts which lack a proper IPR protection and enforcement framework and witness more instances of IPR violation. Better IPR protection and enforcement frameworks in Eastern Europe are one of the key drivers for outsourcing to Eastern Europe.


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