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The tides of change have reached the banks of cell and gene therapy (CGT) manufacturing, washing ashore new concepts and capabilities that are inspiring the industry to rethink traditional business practices. During the relatively short history of CGT manufacturing, drug-sponsor companies and contract development manufacturing organizations (CDMOs) have changed their business expectations, operating models, and partnership dialogues. CGT developers no longer ask themselves whether they want to partner with a CDMO, but instead must consider when and how they want to do it.
During the first years of the CGT boom, companies often built their own manufacturing facilities to ensure capacity because the market lacked alternatives. But recently, some companies have sold their in-house manufacturing facilities and partnered with CDMOs to maintain financial and operational sustainability.
Our latest analysis suggests that the outsourced CGT-manufacturing market will reach a value of US$57.1 billion by 2027, benefiting from a compound annual growth rate (CAGR) of 29% since 2021. It is important for drug sponsors and CDMOs to monitor macroeconomic developments as they plan for the future. Such trends can affect financial metrics, investments, cash on hand, and business priorities. The US Food and Drug Administration (FDA) already has approved four CGTs in 2024, with more expected throughout the year, highlighting the need for CDMOs to upscale their capabilities to meet client demands.
The Evolutionary Tale of CGT Outsourcing
Historically, CDMOs have struggled to acquire and retain the talent needed to build and drive quality processes and technology optimization for CGTs. Inconsistent performance and limited experience from struggling CDMOs created in a weak value proposition and significant trust gaps that led some pioneering drug sponsors to fend for themselves and build their own manufacturing facilities.
Critical manufacturing decisions arise in a product life cycle at four typical points for drug developers. The first occurs at the investigational new drug (IND) application stage, when a company prepares for its first human trial. During that time, a company must establish a way to supply enough investigational product to support early phase trials. A second inflection point occurs when a company prepares for later trials because the size and scale of manufacturing become critical to a program’s success. Companies face further inflection points when they commercialize and scale up products for market, then again when that market expands internationally.
During each of those stages, budget constraints, regulatory risks, talent availability, and project timelines are assessed in the context of building, buying, or leasing manufacturing capabilities. Many executives emphasize the magnitude of such concerns, which could decide the fate of their companies. In an economic environment that often forces sponsors to tighten their purses, choosing the right manufacturing partnership is critical.
Dawn of the Next-Generation CDMOs
Manufacturing capabilities have evolved, leading to the emergence of CDMOs that can offer all-inclusive, cost-effective, low-risk alternatives to traditional models. Competitive CDMOs develop and deploy integrated manufacturing strategies. Such companies have high-tech research capabilities with modern digital infrastructures and data analytics. CDMOs also focus on advanced manufacturing technologies that traditionally have incurred high costs and required specific resources such as automation. The best companies offer tracking and collaboration technologies that improve visibility for drug sponsors and help to build trust by ensuring transparency.
Analytical Testing In House: Every therapy has its own set of quality-release attributes and regulatory requirements, and the struggle to produce CGTs reliably and consistently has given executives many sleepless nights. By providing in-house regulatory expertise and analytical characterization services, CDMOs can relieve a pain point that has jeopardized commercial launches for sponsor companies.
Contracting with Innovative, Cobeneficial Mechanisms: Today’s CDMOs offer creative risk-sharing partnerships such as capacity leasing that entice drug sponsors to invest in services rather than take on complex facility projects. Such contracts enable sponsors to reserve capacity while enabling CDMOs to divert resources that are not needed. That way, sponsors have assured access to capacity, and CDMOs can minimize risk through securing a reliable stream of revenue.
Partnering for Strategic Growth and Expansion: Most modern CDMOs have strategic alliances with academic or research institutions that help establish new facilities and forge creative partnerships. Many CDMOs also have established investment arms to fund start-up companies and accelerate product development.
Anchoring Themselves as Enablers: Next-generation CDMOs are critical members of the CGT ecosystem. They understand regulatory requirements and support activities such as health-authority inspections. They also provide rapid scale-up capabilities and innovative manufacturing technologies.
Few sponsors ask why they need to outsource now. The creative services offered by CDMOs have grown because of mutual trust and shared goals that have emerged among CGT pioneers and their CDMO partners. CDMOs seek to match strides with drug sponsors, enabling CGT pioneers to rethink their complex manufacturing challenges as collaborative projects. Investments have helped service providers reinvigorate their value propositions and chip away at the traditional internal-build approach used by CGT developers.
Leveraging Information Technology
Artificial intelligence (AI) and associated technological innovations are frequent drivers of industry advancement. In the next three to five years, the rise of AI and machine learning (ML) could transform operations across manufacturing and supply chains within the CGT industry. According to the industry experts that we spoke with, AI is poised to improve manufacturing in a number of ways:
• maximizing capacity and resource use in manufacturing by multifactorial analysis
• optimizing and streamlining supply and demand, sales, and operations planning
• improving the accuracy of forecasts to plan against
• predicting batch deviations, logistics and delivery delays, and quality-release issues early enough for corrective actions
• compiling electronic batch records and regulatory submission documents using intelligent document processing
• optimizing manufacturing yields while accounting for factors that are outside of human control, such as donor/patient raw-material variability and cell-growth patterns in vitro
• aiding in process development, analytical characterization processes, and scale-up.
To derive the most benefit from such technologies, CDMOs and drug developers must work together and break down the barriers that separate them. They should share costs and data and collaborate on thought leadership. Sharing in technology adoption can increase efficiencies and help to ensure that life-saving therapies will be available and affordable to patients.
Resiliency Through Current Macroeconomic Conditions
In the past decade, the experiences of CGT companies have shown that well-orchestrated manufacturing practices figure into commercial success. Several promising therapies have not realized their potential because of manufacturing issues and bottlenecks. Even approved therapies still face challenges in providing consistent and reliable outcomes because of the complexities involved in manufacturing.
Evolving economic outlooks and changing government policies force drug sponsors to reevaluate their pipeline expectations. However, the CGT space is expected to continue expanding at a faster rate than that of the broader life sciences space. But if the current macroeconomic outlook continues, funding will be challenging, especially for start-up companies.
Outsourcing should integrate strategic approaches for managing risk, costs, and investments that align with market growth expectations. Such partnerships are different from traditional, transactional relationships between drug sponsors and vendors. Creative agreements and unprecedented collaborative models are likely to emerge as a new foundation for CGT manufacturing as the industry evolves. Such models will ensure that emerging CDMO solutions align with the changing needs of drug sponsors and will position both partners to respond quickly to challenges.
Talent Shortage Continues
Despite industry-wide downsizing in 2022 and 2023, demand remains high in CGT jobs because of rapid growth in highly specialized positions and manufacturing-operator functions. According to the most recent Alliance for Regenerative Medicine (ARM) workforce report on the CGT industry (2023), 50% of CGT respondents indicated that talent shortages have impacted their manufacturing and clinical project timelines (1). Digging deeper, we find that 47% of respondents report having seven or more positions open, with 66% responding that it takes roughly two to three months to fill open roles.
Although the talent gap has not notably impeded the growth of the sector, the current wave of regulatory approvals underscores the need to prevent potential bottlenecks in manufacturing and clinical pipelines. The industry’s rapid evolution makes traditional educational pathways inadequate to prepare graduates for emerging roles and technologies. Additionally, competition from other sectors, such as biotechnology and pharmaceuticals, intensifies the talent shortage.
To address recruitment challenges, some CDMOs adopt innovative strategies to attract and retain talent. One approach involves partnering with academic institutions and professional organizations to develop specialized training programs tailored to industry needs. For example, Swiss American CDMO established an alliance with BioNTX to support talent development in the Dallas–Fort Worth area of Texas, and the Center for Breakthrough Medicines (now SK pharmteco) has a similar collaboration with the University of Pennsylvania.
Market trends indicate sustained growth in the CGT industry with increasing investment from both public and private sectors. We expect growing demand for CDMO services alongside regulatory frameworks that continue to evolve to accommodate advanced therapies. The emergence of new modalities, such as RNA-based therapeutics, expands that demand by presenting more opportunities for industry increases and potential for a widening workforce gap.
Companies can enhance their talent development significantly by partnering with local academic and research institutions and medical facilities. Such organizations should also leverage state funding opportunities and engaging with industry collaborators. Such collaborations are imperative for success in the burgeoning field of cell and gene therapies, benefiting patients by accelerating new treatments and paving the way for future generations to pursue careers in regenerative medicine.
Reference
1 Workforce Report: Gap Analysis for the Cell and Gene Therapy Sector. Alliance for Regenerative Medicine: Washington, DC, March 2023; https://alliancerm.org/sector-report/workforce.
Corresponding author Omkar Kawalekar is senior manager ([email protected]), and Amit Agarwal is managing director of life sciences ([email protected]), both at Deloitte Consulting LLP. Audrey Greenberg is cofounder of the Center for Breakthrough Medicines and chief business officer of SK pharmteco; ([email protected]).
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