The CDMO Consolidation Squeeze
Can specialised players survive and thrive in the China and mega-CDMO era?
Small and mid-sized specialised CDMOs (contract development and manufacturing organisations) are the unsung heroes of biopharma. They take medical breakthroughs from the lab bench to GMP production and ultimately to the patient. They are formed of expert multidisciplinary teams, constantly solving complex manufacturing challenges in innovative ways, whilst balancing rigorous compliance requirements. Their specialist capabilities and deep client relationships have long been a competitive edge.
But the market is shifting fast. Consolidation, global competition and evolving technologies are converging into strong headwinds. For many specialist CDMOs, the question is no longer how to grow, but how to survive
A market in Flux
We are at an exciting but uncertain inflection point in the biopharma world. With a promising and diverse pipeline of new modalities such as cell and gene therapy, ADCs, oligos, next-gen vaccines and CRISPR therapeutics, and new clinical trial data published weekly, the future certainly looks bright.
For patients, this is a new era of hope. For Manufacturing leaders, it is a high-stakes guessing game. Where should we deploy capital? Which technologies will dominate? How can investment be made with such uncertainties without overextending?
Enter the Mega-CDMO
For those with deep pockets, the answer is simple: hedge your bets and cover all bases. Over the past few years, Mega CDMOs have been on an M&A frenzy, with spending exploding by 30% in 2023 alone.
At the current rate, it is projected that by 2030, the top 5 CDMOs could command 40% of the market, up from 15% in 2023.
With this scale, Mega CDMOs have also been lightning fast in adopting Industry 4.0 technologies. One pertinent example of this was during the COVID-19 pandemic, where Moderna transferred its process to Lonza in record-breaking time, whilst providing live visibility of contracted manufacturing operations by leveraging digital technologies.
High-value clients are responding to this shift, increasingly gravitating to those who can offer a one-stop shop, where scale, breadth of service and global footprint outweigh specialisation and locality - a niche where the small/medium specialised CDMO typically used to thrive.
The rise of China
Price used to be a refuge for smaller players. If you couldn’t match scale, you could at least offer a leaner, more affordable service. That advantage is rapidly disappearing.
Since significant reforms in China’s Market Authorisation System, Chinese CDMOs have been able to directly serve international markets. With the backing from the government, Chinese CDMOs have scaled fast, combining state-of-the-art facilities with competitive pricing. WuXi Biologics exemplifies the trend: from $100M revenue in 2016 to over $2B in 2022, now operating multiple facilities worldwide. For cost-conscious clients, it’s hard to ignore the combination of capability and price.
Additional Headwinds
In addition to consolidation and Chinese competition, small/medium specialised CDMOs face a multitude of operational and strategic challenges:
Outdated infrastructure that is expensive and disruptive to upgrade
Talent drain, with skilled staff moving to big pharma, tech, and finance
Supply chain fragility, exacerbated by tariffs and geopolitical tensions
Private equity pressure, prioritising short-term returns over long-term investment
Limited venture funding to expand capacity or invest in new technologies
Rising regulatory expectations for digital traceability and real-time compliance
Each of these factors compounds the difficulty of competing against better-capitalised rivals.
The Case for the Smart CDMO
Survival won’t come from trying to outspend or outscale the mega-CDMOs. The path forward lies in out-innovating them.
Just as fintech challengers like Revolut reshaped banking, the next wave of winning CDMOs won’t necessarily be the biggest; they’ll be the smartest. AI and data-driven operating models offer specialist CDMOs a way to match, and even exceed, the service levels of larger players, without the same overheads.
By becoming “smart CDMOs,” smaller players could reposition themselves as flexible, tech-enabled links in the commercialisation chain, offering speed, transparency, and agility that the cost, queue time or bureaucracy of mega CDMOs can’t match.
In practice, the smart CDMO could deliver:
Real-time transparency
Live process monitoring and predictive techno-economic analysis, giving clients actionable insights at every stage.
Speed to clinic
AI models trained on diverse, real-world batch data can predict optimal processes before a single scale-down experiment is run.
Agile compliance
AI-driven workflow systems that adapt instantly to different regulatory environments, maintaining audit readiness by default.
Small, high-output teams
AI-augmented workflows that let lean teams deliver more with fewer resources.
Data-rich partnerships
Automated, adaptive reporting tailored to each client, plus AI-generated documentation for frictionless tech transfer.
This isn’t a distant vision, most of the technology exists today. The real challenge is adoption: implementing digital infrastructure, reprioritising efforts, and developing the partnerships to integrate AI seamlessly into GMP operations.
The window is closing
The consolidation wave is real, and Chinese entrants aren’t slowing down. Waiting to see how the market settles is not an option. For small/medium specialised CDMOs, the next two to three years will be decisive.
The winners will be those who:
Invest early in AI and digital manufacturing infrastructure
Develop data-sharing frameworks that enhance transparency and client confidence
Build partnerships that expand capability without diluting specialisation
Market themselves as the agile alternative to mega-CDMOs, able to deliver faster, more customised results
The tools are here. The opportunity is real. And for those willing to adapt, smart CDMOs will be able to do more than survive, but also thrive.