CDMOs set for fastest growth in China and US, report finds

The global outsourcing market is set to grow the fastest in China and the US but India has cooled its interest, analysis by Biobeat finds. Published ahead of CPHI Frankfurt, the world’s largest CDMO conference, the analysis reveals the market has demonstrated resilience, with higher growth ahead predicted for mAbs, PROTACs, and C&GT in 2026. The report finds China and the US look best placed to capitalise in the medium term, India is cooling its growth from last year and Europe remains more neutral in outlook. The annual analysis is provided by Brian Scanlan, Executive Advisor at Edgewater Capital and Managing Partner at Freedom Bioscience Partners. It draws together data points from across venture capital (VC) funding, IPOs, licensing, as well as M&A and discovery pipeline to provide a macro view outlook for CDMO growth in 2026, and the best areas to invest resources. China has shown growth in its innovative biopharma R&D pipeline and, with BIOSECURE’s market impact now in question, CDMOs will benefit from both continued Western customers and a very strong domestic market. CDMOs in the US, EU and India are expected to see rising demand from Western innovators. Western CDMOs may face increasing pricing pressure from drug pricing reforms, while Indian CDMOs are likely to retain stronger pricing leverage and remain well positioned. AI investment on the rise but assets ‘overpriced’ The report finds that a market challenge lies in biotech VC fundraising, which remains down 92% year-on-year. Much of the available capital is now flowing into AI rather than early-stage biotech. Although the now confirmed $50 billion NIH funding programme should help ease some bottlenecks, anaemic IPO activity means biotechs are increasingly turning to M&A and licensing deals. The analysis suggests this is a trend that big pharma has embraced, with China-based biotechs now accounting for over 40% of total upfront licensing value. The analysis also shows that global outsourced commercial manufacturing demand remains stable, sustained by consistent new drug launches, and CDMOs focused predominantly in clinical and commercial phase services performed better in 2025. Oncology could offer greater growth potential for mid- and small-scale CDMO providers, with CDMOS focused on clinical activities set for a higher growth return over the next year. “My advice to CDMOs is to evaluate how their capabilities align with emerging industry needs by following drug substance and drug product trends from early preclinical through early clinical development,” Scanlan said. “CDMOs that differentiate through technology, equipment, and analytical expertise – particularly in RNAi, ADCs, PROTACs, and multi-specific antibodies – will be well positioned. Smaller CDMOs may even hold an edge through niche specialisation.” Alex Heeley, Managing Partner at De Facto, the life science agency that owns Biobeat, added: “Reading between all of ’s data points to make a single macro conclusion ahead of the market curve, my view is that AI assets are overpriced. When — not if — there is a correction in this market (80% of this year’s share growth is from AI, which is clearly ‘bubble territory’) capital will loosen for biotech. The medium-term CDMO winners, indication-specific examples aside, will be those that can advance biotech to Phase IIb fastest, as that’s when a sale becomes more profitable.” Bruno Quinney, Content Team, DDW