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Pharma CMOs may feel heat as USFDA approves fewer new drugs, GlobalData report says

A sharp decrease in USFDA approvals of the most innovative drugs in 2022 will directly reduce commercial-scale production contracts in 2023 for larger contract manufacturing organizations (CMOs), according to the latest report by data and analytics company GlobalData.

Inflation and declining FDA drug approvals will pose challenges for pharma contract manufacturers in 2023, stated GlobalData in its latest report – ‘New Drug Approvals and Their Contract Manufacture – 2023 Edition,’

The report said that USFDA’s new molecular entity approvals declined substantially in 2022, causing overall New Drug Application (NDA) approvals to drop, which meant fewer commercial-scale production contracts for the most innovative products.

However, GlobalData’s analysis of the USFDA’s drug approvals over the last decade found that 2022 was a record year for cell and gene therapy approvals.

Pharmaceutical companies have a high tendency to outsource the finished dose manufacture of new molecular entities (NME).

“The decline in drug approvals in 2022 may be a sign of increased reluctance by the USFDA to authorize innovative drugs, caused by the fallout from the agency’s accelerated approval of Biogen’s Aduhelm for Alzheimer’s disease in June 2021,” said Adam Bradbury, pharma analyst at GlobalData.

“This event caused controversy and added to pre-existing claims that the FDA approval process may not be as rigorous as it was in the past,” Bradbury said.The report said new challenges such as rising inflation will bring uncertainty to the ongoing global recovery in 2023.

Bradbury said the pharma industry (in the US) faces challenges from increasing cost pressures, shrinking consumer spending power, staff shortages, and geopolitical tensions.

“CMOs will need to find ways to remain competitive in these difficult conditions while maintaining quality and compliance. High inflation will also impact supply chains and R&D activities and challenge their feasibility,” he added.

But CMOs focused on biologic drugs stand to gain, as biologic NME approvals outnumbered small molecule equivalents in 2022.

“Biologics are favored by many pharma sponsors due to less potential competition. They are expensive to develop, require specialist manufacturing capabilities, are more difficult to duplicate than small molecules, and tend to be sold at high prices,” Bradbusy said.

“An increasing number of CMOs will have to invest in acquiring biologic production capabilities if biologics continue to be the majority of innovative approvals,” he added.

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