CDMO – What’s the Difference between a CRO and CDMO (including Top Examples)?

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The pharmaceutical industry has been undergoing rapid, substantial change in the past few decades, and even more particularly during the ongoing COVID-19 pandemic. Initially dominated by a handful of behemoth companies, smaller companies are now entering the game, especially with outsourced contract organizations. These adjunct businesses have grown so popular in relevance that they now too are consolidating to form giant companies in their own right.

Amongst these outsourced contract companies are CROs, also known as Contract Research Organizations, and CDMO’s, which stands for Contract Development and Manufacturing Organization. These two groups play an increasingly important role within the broader pharmaceutical industry because they serve as a financial hedge for their client companies to reduce costs and increase profit. To be specific, they allow mainstream pharmaceutical companies not to have to fully commit in-house resources to a particular drug candidate that may end up proving ineffective (or even too harmful) altogether. They further allow the client company to devote additional resources that may demonstrate more significant potential. This is particularly important in the very competitive biopharmaceutical space.

This article first explores a foundational primer on the biopharmaceutical value chain so that CRO’s and CDMO’s can be more thoroughly understood. Then we’ll expand on this foundation by discussing the differences between these two adjunct groups of companies and how they even overlap in responsibilities in some regards. Throughout, we’ll go through examples of both CROs and CDMO’s to identify some presently noteworthy ones.

The biopharmaceutical value chain is the 5-stage process by which mainstream pharmaceutical companies operate to produce their medications. These five stages include drug discovery, drug development, drug manufacturing, drug distribution, and drug marketing/sales. Drug discovery is where various medication candidates are explored for possible further processing. Potentially viable candidates then go through drug development, where testing is performed to ensure efficacy and safety. Once governmental agencies confirm these two factors, the potential drug undergoes manufacturing to produce the respective medication at large-scale physically. Drug distribution then occurs when networks are formed to get the now approved and manufactured drug into the hands of hospitals, doctors, and patients. Finally, the drug marketing/sales stage is when and how these mainstream pharma players get consumers to buy their product(s).

Contract Research Organizations (again, more commonly known simply as CRO’s) are typically involved in the first two stages of the pharmaceutical value chain – drug discovery and drug development. The outsourced contract services they provide to their clients include examples such as biopharmaceutical development, biologic assay development, commercialization, preclinical research, clinical research, clinical trials management, and pharmacovigilance. There is also a number of CRO’s that venture into drug manufacturing as well. Some currently notable CRO’s include:

–          Covance (LabCorp)

o   Headquarters location: Princeton, New Jersey, USA

o   Current market capitalization: $18.86 billion (LabCorp)

–          IQVIA

o   Headquarters location: Durham, North Carolina, USA

o   Current market capitalization: $30.72 billion

–          Syneos Health

o   Headquarters location: Morrisville, North Carolina, USA

o   Current market capitalization: $5.92 billion

–          Parexel

o   Headquarters location: Waltham, Massachusetts, USA

o   Current market capitalization: N/A (private company)

–          PRA Health Sciences

o   Headquarters location: Raleigh, North Carolina, USA

o   Current market capitalization: $6.91 billion

–          PPD

o   Headquarters location: Wilmington, North Carolina, USA

o   Current market capitalization: $12.41 billion

–          Charles River

o   Headquarters location: Wilmington, Massachusetts, USA

o   Current market capitalization: $11.65 billion

–          ICON

o   Headquarters location: Dublin, Ireland

o   Current market capitalization: $10.62 billion

–          WuXi AppTec

o   Headquarters location: Shanghai, China

o   Current market capitalization: 246.64 billion CNY

–          MedPace

o   Headquarters location: Cincinnati, Ohio, USA

o   Current market capitalization: $4.19 billion

CDMO’s (again, also known more formally as Contract Development and Manufacturing Organizations) usually contribute to this pharmaceutical value chain’s second and third stages. Some examples of the outsourced contract services they provide include pre-formulation, formulation development, stability studies, method development, preclinical and Phase I clinical trial materials, late-stage clinical trial stage materials, formal stability, scale-up, registration batches, and commercial production. A few CDMO’s even dabble in the first drug discovery stage of the value chain. Some top examples of CDMO’s servicing mainstream pharmaceutical companies include:

–          Cambrex

o   Headquarters location: East Rutherford, New Jersey, USA

o   Current market capitalization: N/A (private company)

–          Recipharm

o   Headquarters location: Stockholm, Sweden

o   Current market capitalization: 12.74 billion SEK

–          Thermo Fisher Scientific

o   Headquarters location: Waltham, Massachusetts, USA

o   Current market capitalization: $177.33 billion

–          Samsung Biologics

o   Headquarters location: Incheon, South Korea

o   Current market capitalization: 45.32 trillion KRW

–          Fujifilm Diosynth Biotechnologies

o   Headquarters location: Morrisville, North Carolina, USA

o   Current market capitalization: $25.38 billion (Fujifilm Holdings Corporation)

–          WuXi Biologics

o   Headquarters location: WuXi, China

o   Current market capitalization: 263.50 billion HKD

–          Lonza

o   Headquarters location: Basel, Switzerland

o   Current market capitalization: 42.69 billion CHF

–          Catalent

o   Headquarters location: Somerset, New Jersey, USA

o   Current market capitalization: $14.46 billion

–          Center for Breakthrough Medicines

o   Headquarters location: King of Prussia, Pennsylvania, USA

o   Current market capitalization: $98.45 million (Discovery Laboratories, aka Windtree Therapeutics)

–          Siegfried

o   Headquarters location: Zofingen, Switzerland

o   Current market capitalization: 2.77 billion CHF

It should be further noted that the fourth and fifth stages of the biopharmaceutical value chain – drug distribution and drug market/sales – are typically performed in-house by these pharmaceutical companies. This is because the most financially risky stages (the first three – drug discovery, drug development, and drug manufacturing) have already been accomplished by this point.

All in all, Contract Research Organizations and Contract Development and Manufacturing Organizations play an ever increasingly integral role in the broader pharmaceutical industry. The CRO’s typically help mainstream pharmaceutical companies with the first two stages of medication production – drug discovery and drug development – whereas CDMO’s usually help them with the second and third stages – drug development and drug manufacturing. The fourth and fifth stages, drug distribution and drug marketing/sales, is more often handled in-house within this game.

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