The European CDMO market comprises companies providing outsourced drug development and/or manufacturing services. The industry can be split based on players’ offerings. As such, we segmented the European market into: (i) multidisciplinary, (ii) active pharmaceutical ingredients, (iii) finished dosage forms - generalist and (iv) finished dosage forms - speciality.

The European market has a fragmented nature and is comprised of players with different offerings in terms of value chain coverage and modalities provided (e.g. small molecules, biologics, advanced therapies). However, the industry is on a consolidating track, as clients increasingly prefer to outsource their drug development and manufacturing activities to one full service CDMO rather than several niche providers. This simplifies the supply chain and is more time-efficient from a customer’s perspective.

Sponsor-led interest has been considerable, with ~50% of identified assets being backed by financial sponsors (March 2023). Private equity investors are primarily attracted by the pharmaceutical megatrends (e.g. ageing population, rising incidence of chronic illnesses), attractive growth rates in new therapy areas (e.g. biosimilars) and overall high revenue visibility of identified business models.

Relevant ESG topics mainly revolve around environmental and social challenges. On the environmental side, limiting the usage of plastic packaging as well as reducing the carbon footprint of manufacturing activities are on top of stakeholders’ minds. From a social perspective, ensuring occupational health and safety as well as preventing drug misuse and abuse by patients are the most important considerations. CDMOs also need to be mindful of information-related governance, as they store sensitive patient-related data (e.g. from clinical trials) and intellectual property (e.g. malware attack on Siegfried’s IT systems in 2021).