Contract manufacturing is a form of outsourcing and is generally referred to as a contract between two firms in which one firm develops/manufactures products under the label or brand of another firm. Contract manufacturers offer such services to various firms built on their own methodology or the customers’ designs, formulas, and/or specifications. Contract manufacturers provide highly valuable services to expanding industries such as pharmaceutical, automobile, consumer electronics, chemical, packaging, and others. Globally, organizations from various sectors have preferred contract manufacturing for various factors based on the economic condition and their investment capability. Moreover, factors such as reduced operational cost and time, flexibility in operation, improved resource allocation, and increased efficiency are some of the pivotal growth factors for the contract manufacturing market. Further, faster production rate and turnaround, better quality control, and scalability provided by the contract manufacturing organizations are also augmenting the global market growth. The global contract manufacturing market is expected to grow at a CAGR of more than 5.5% during the forecast period.
Contract Pharmaceutical Manufacturing is gaining traction
The pharmaceutical industry is one of the leading industries that is adopting contract manufacturing services in its regular practices. Increasing demand for pharmaceutical products for the treatment of various diseases has augmented the soaring demand for outsourcing manufacturing services. Pharmaceutical contract manufacturing is growing rapidly due to the increasing demand for generic medicines and biologics, the capital-intensive nature of the business, and complex manufacturing requirements. Various pharmaceutical contract manufacturers are expected to provide services and support in the drug development process in the near future, which is also acting as a growth factor for the market. Active Pharmaceutical Ingredient (API) manufacturing service in the pharmaceuticals sector is a widely adopted service in the contract manufacturing market.
Further, contract manufacturing services in the electronics industry are widespread, from printed circuit board design to satellite instrumentation, and are commonly outsourced by the OEM. An OEM can choose to outsource the particular product and can also offer supplementary services to various subcontractors, which can improve logistics or distribution. Moreover, the contract manufacturing process has been widely used in the automotive industry. For instance, Mercedes appointed AM General as a contract manufacturer to produce 12,000 of their R-class vehicles intended to export to China. Mercedes would manage the logistics and supply chain, and all parts of the R-class vehicles would be assembled and painted on AM General’s production line in Mishawaka, Indiana.
North America leads the global market
North America is expected to dominate the contract manufacturing market owing to improved reimbursement policy, well-developed technology, high healthcare expenditure, and the presence of the leading market players. Further, there are large market players that are providing healthcare and life science contract manufacturing services in the North American region. Europe is anticipated to hold the second position in the global contract manufacturing market due to the support provided by the government bodies for research & development in the pharmaceutical industry drives the market in the European region. The Asia Pacific region is projected to be the fastest-growing region over the forecast period. Rapidly improving technology and the presence of emerging countries such as India are expected to drive market growth in the Asia Pacific region. Additionally, the Middle East and Africa hold a considerable share in the market owing to the presence of meager and slow developing economies, especially in the African region.
Market Structure and Competition Landscape
The global contract manufacturing market is fragmented in nature and consists of several players operating in the market. Some of the prominent players that contribute significantly to the market growth include Patheon (Thermo Fisher Scientific Inc.), Lonza Group, Boehringer Ingelheim International GmbH, Almac Group, Dr. Reddy Laboratories Ltd., Faurecia SA, Hyundai Dymos, Lear Corp., Magna International Inc., NHK Springs Co., Ltd., Britech Industries, Hankscraft Inc., Maysteel Industries LLC., Talan Products Inc., GSH Industries Inc., Hon Hai Precision Industry Co., Ltd. (Foxconn), Pegatron Corp., Jabil Inc., Flex Ltd., Wistron Corp., Hearthside Food Solutions Inc., Gehl Foods LLC, Agilery AG, Valk Industries Inc., and Warren Industries Inc. among others. These players adopt various strategies in order to reinforce their market share and gain a competitive edge over other competitors in the market. Mergers & acquisitions, partnerships and collaborations, and product launches are some of the strategies followed by industry players. Some of the key developments in the global contract manufacturing market include,
- In November 2020, Laurus Labs Ltd. acquired Bangalore-based biotech company Richcore Lifesciences. Laurus Labs has signed a definitive agreement to acquire 72.55% of Richcore’s shares from its private equity investors Eight Roads Ventures and VenturEast and other promoters. This acquisition aimed to diversify into the manufacturing of biotech drugs. Richcore has advanced R&D and manufacturing facilities and focuses on developing and manufacturing biotech products critical for manufacturing biological drugs. Richcore also offers support to develop and scale up bioprocesses by providing contract research, development, and manufacturing services (CDMO).
- In February 2021, Foxconn Technology Group reached a tentative agreement with Fisker Inc., an electric vehicle (EV) startup-turned-SPAC to manufacture EVs primarily to be sold in North America, Europe, China, and India. Under the agreement, Foxconn will begin production of EVs in 2023 with a projected annual volume of over 250,000 vehicles under the Fisker brand name.
Key Market Segmentation
RationalStat has segmented the global contract manufacturing market on the basis of industry, and region.
- By Industry
- Food & Beverages
- Consumer Electronics
- Others (Aerospace & Defense, etc.)
- By Region
- North America
- Latin America
- Rest of Latin America
- Western Europe
- Rest of Western Europe
- Eastern Europe
- Rest of Eastern Europe
- Asia Pacific
- South Korea
- ASEAN (Indonesia, Vietnam, Malaysia, etc.)
- Rest of Asia Pacific
- Middle East & Africa
- South Africa
- Rest of the Middle East & Africa
- North America
RationalStat has developed a state-of-the-art research methodology to crunch numbers and provide the best possible real-time insights to clients. We combine a varied range of industry experience, data analytics, and experts’ viewpoint to create a research methodology for market sizing and forecasting.
RationalStat combines a mix of secondary sources as well as primary research to assess the market size and develop a forecast. Key steps involved in accurately deriving the market numbers are:
- Defining the problem by understanding the type of market and data required by the client.
- Data gathering and collection through relevant paid databases, publicly available sources, company reports, annual reports, surveys, and interviews.
- Formulating a hypothesis to create market numbers, forecast, influencing factors, and their relevance.
- Evaluating and analyzing the data by referring to data sources utilized and leveraged.
- Validating, interpreting, and finalizing the data by combining the details gathered from primary and secondary sources with the help of experienced analysts.
- Annual reports, company filings, investor presentations, product catalogs, industry-specific associations, and company documents
- Industry and market-related documents available in the public domain
- Paid database including Bloomberg, Factiva, S&P Capital IQ, FactSet, Refinitiv Eikon, ICIS, EUWID, Thomson Reuters, among others
- Whitepapers, research papers, and industry blogs.
Why Buy this Report?
The report is intended for contract manufacturing service providers, original equipment manufacturers (OEMs), investment firms, government organizations, manufacturing firms, healthcare facilities, educational organizations, regulatory agencies, research organizations, and market research firms, among others. The report provides an in-depth analysis of market size, consumption pattern, ongoing market trends and challenges, and future market opportunities. The report will serve as a source for a 360-degree analysis of the market thoroughly delivering insights to clients to find the right answers to their business questions.
Frequently Asked Questions (FAQs)
The global Contract Manufacturing market is expected to grow at a CAGR of over 5.5% during the forecast period 2022-2028.
North America is dominating the global Contract Manufacturing market in 2021.
The global Contract Manufacturing market is estimated at around US$ 208 billion in 2021.
Flexibility in operations and reducing operational costs are the key drivers in the global Contract Manufacturing market.
Major companies operating in the global Contract Manufacturing market include Patheon (Thermo Fisher Scientific Inc.), Lonza Group, Boehringer Ingelheim International GmbH, Almac Group, Dr. Reddy Laboratories Ltd., Faurecia SA, Hyundai Dymos, Lear Corp., Magna International Inc, etc.