As Outsourcing Relationships Evolve, Vaccine Production Will Continue To Shift To CMOs

By Kate Hammeke, Director of Marketing Intelligence, Nice Insight

The vaccine contract manufacturing market currently accounts for less than 1 percent of the total vaccine market — approximately $705M of $33.7B — but it is expected to grow over the next decade. Varying factors will influence the growth of the contract manufacturing market segment, including overall growth of the vaccine market, especially in emerging markets, as well as the shift in the dynamic of outsourcing relationships.

Traditionally, vaccines had been viewed as a low-margin business with high barriers to entry. Complexity of development and production, combined with significant fixed costs, low profit margins, and overregulation had limited competition among vaccine manufacturers and supposedly restricted innovation. However, advances in both preventative and therapeutic vaccines have renewed interest and brought about competition in this market segment.

Among Nice Insight survey respondents, the primary area of therapeutic focus for vaccine production outsourcers is infectious diseases, at 71 percent. Increased global demand for the influenza vaccine has contributed significantly to the growth of the outsourced vaccine market — especially since the vaccine doesn’t offer long-term immunity and must be administered annually. Support and media exposure from organizations such as the International AIDS Vaccine Initiative help to keep the important role of vaccines in healthcare in the forefront and drive attention toward developing vaccines for diseases that currently have no cure. This exposure, coupled with recent reports of progress in two separate approaches to provoking an immune response to HIV, certainly contributes to the increasing number of biopharmaceutical companies interested in developing or manufacturing vaccines.