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March 2025
The global small molecule CDMO market size is calculated at US$ 72.81 in 2024, grew to US$ 78.01 billion in 2025, and is projected to reach around US$ 145.12 billion by 2034. The market is expanding at a CAGR of 7.14% between 2025 and 2034. The rise in chronic conditions and demand for generic medicines is driving the small molecule CDMO market.
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For almost a century, small-molecule medications have formed the backbone of the pharmaceutical sector. Any low molecular weight organic substance is referred to by this definition. New and inventive methods for creating small-molecule medications are made possible by the quick development of biopharmaceutical research and technology. In order to successfully navigate small molecule API development and manufacturing from start to finish, biotechnology and pharmaceutical companies seeking to outsource critical components of small molecule drug development and manufacturing should look to a top-tier CDMO with extensive industry experience. Technology breakthroughs, shifting consumer needs, and stricter regulations are all contributing to the quick changes in the small molecule contract manufacturing industry.
In November 2024, Arcturus Therapeutics, Inc., a commercial mRNA medication and vaccine business, and Axcelead, Inc., which oversees a collection of top pharmaceutical and healthcare platform firms, partnered to develop ARCALIS. In addition to contract development and manufacturing organization (CDMO) services, ARCALIS is involved in the development of mRNA medicines and vaccines. In order to produce mRNA vaccines domestically, the business intends to set up a whole system that includes making formulations and active medicinal components as well as developing manufacturing methods.
Chemistry and the discovery of small molecules were significantly impacted in a short period of time by artificial intelligence (AI) and related approaches like machine learning (ML) and general artificial intelligence (GenAI). AI has several potential applications in small molecule drug discovery, including the ability to speed up, reduce costs, raise success rates, and foster creativity. Gains of up to 30 months might be unlocked with the use of AI and a thorough comprehension of the preclinical candidate profile. Many pharmaceutical firms are either using AI or are starting to investigate its application in their discovery efforts due to their recognition of the approach's potential advantages and power. The small molecule drug discovery pipeline powered by AI is predicted to grow by over 40% per year. Thus, synthetic and medicinal chemists need to change the way they operate.
Rising Demand for Small Molecules
Due to its ability to effectively treat a variety of illnesses and conditions, small-molecule medications are becoming more and more in demand. Pharmaceutical firms are drawn to small-molecule medications because they are less expensive and easier to make. As a result, there is now more demand for CDMO services from small molecule innovators. Due to growing R&D expenses and the demand for specialized knowledge, the trend of outsourcing medication research and manufacturing has been accelerating recently. Since small molecule innovator CDMOs have the infrastructure, know-how, and technology required to support the research and production of small molecule pharmaceuticals, they are in a good position to offer these services.
Developmental Complexities
The manufacture of small-molecule drugs involves a number of complications. Late-phase development, formulations, process optimization, and commercial supply capabilities all need specialized knowledge and the newest technology. Another major issue with CMC (chemistry, manufacturing, and controls) is regulatory compliance. Because CDMOs are skilled in modern manufacturing technology, pharmaceutical corporations highly value them as partners.
Rising Demand for HPAPIs
Major pharmaceutical companies use extremely powerful APIs (HPAPIs) in their drug development pipelines. These compounds are frequently linked to cutting-edge cancer therapies. Along with many other indications, the molecules are also useful in the treatment of diabetes and autoimmune illnesses. Currently, more than 30% of the medication research pipeline is composed of HPAPI compounds. A more effective pipeline of medications with lower dosage needs and fewer side effects has emerged as a result of the steady transition toward HPAPI acceptance, which has fueled the use of such drugs for a variety of therapeutic reasons.
By product, the active pharmaceutical ingredients (API) segment held the largest share of the small molecule CDMO market in 2024. APIs, which are in charge of creating and producing the essential ingredients that give medications their therapeutic benefits, are essential to the worldwide healthcare sector. APIs are crucial for treating a variety of medical diseases since they are the main ingredients that give drugs their desired effects. The market for APIs has grown significantly in recent years due to shifting regulatory frameworks, rising healthcare demands, and improvements in pharmaceutical technology.
By product, the finished drug products segment is expected to grow significantly in the small molecule CDMO market during the forecast period. This section covers the creation and manufacturing of finished pharmaceutical products that are prepared for patient use, such as tablets, capsules, and injectables. The growing complexity of medication formulations and the growing need for specific dosage forms, such as combination and controlled-release medicines, are driving this segment's rise. The growth of this market sector has been greatly aided by developments in formulation technology and the expanding practice of contracting with CDMOs to create FDFs. Demand is rising for CDMOs that provide FDF CDMO services.
By drug type, the innovators segment dominated the small molecule CDMO market in 2024. As adaptable third-party service providers, CDMOs help pharmaceutical businesses at every step of the medication-making process by giving assistance with manufacturing, formulating, and finishing procedures, as well as research and development. Over the past ten years, CDMOs have become more prevalent as a result of consolidation-driven mergers and acquisitions (M&A) that are becoming more active.
By drug type, the generics segment is anticipated to grow at the fastest growth rate in the small molecule CDMO market during the predicted time frame. Because of their affordability, generic medications make up a sizable amount of the worldwide drug industry and are becoming more and more well-liked by patients, healthcare professionals, and governments looking to lower total medical costs. Working together with CDMOs to develop and produce their goods can assist generic medicine makers save costs and becoming more competitive in the market.
By application, the oncology segment held the major share of the small molecule CDMO market in 2024. Among the main targeted treatments for cancer are small-molecule inhibitors. A lot of work has gone into creating new small molecule inhibitors because of their benefits in targeting a variety of targets, being easy to take, and having the capacity to enter the central nervous system. The US Food and Drug Administration has authorized over 88 small-molecule inhibitors to treat malignancies so far.
By application, the autoimmune/inflammation segment is poised to grow at a steady rate in the small molecule CDMO market during the forecast period. Three to five percent of people worldwide suffer from autoimmune and inflammatory illnesses, which are brought on by an individual's immune system attacking healthy bodily components. The healthcare system bears a heavy weight from inflammatory and autoimmune illnesses. For many illnesses, small molecule (SM) therapies offer much-needed supplemental therapy alternatives. Oral administration, intracellular targeting, simplicity in combination therapy, and reduced production costs are some of the benefits that SMs have over LMs.
North America dominated the small molecule CDMO market in 2024. The market for small molecule developers is growing, and North America is one of the main suppliers. A number of reputable biotechnology, pharmaceutical, and medical device businesses define it. The region's need for contract manufacturing is also expected to rise as a result of the pharmaceutical and life sciences industries' increased R&D investments. Additionally, there will probably be a greater need for CDMO services to create pharmaceuticals due to the rising rates of diabetes, cardiovascular problems, and cancer in the area. Increased demand for local contract manufacturing services is expected as a result of strict laws controlling product development, production, and quality control.
According to the IQVIA Institute and AAM's annual savings report, using FDA-approved generic and biosimilar medications saved patients and the American healthcare system $445 billion in 2023 and more than $3 trillion over the previous ten years. Since the first biosimilar was introduced in 2015, savings from biosimilar medications alone have grown to $36 billion and $12.4 billion in 2023.
By 2070, Canada's population of 38.23 million will have grown to almost 50 million. The Canadian government has invested over $2.3 billion in 41 initiatives related to the biomanufacturing, vaccine, and medicines ecosystem, enhancing the country's capacity to respond to pandemics and fostering innovation in life sciences. From drug research to diagnostics and biotech, the Canadian life sciences sector is become more diverse and active.
Asia Pacific is estimated to host the fastest-growing small molecule CDMO market during the forecast period. It is anticipated that low labor costs, low service prices, and the availability of skilled workforce at a cheaper cost than in industrialized countries will propel regional market expansion. One of the primary factors expected to fuel regional market expansion during the forecast period is the increasing regulatory emphasis on manufacturing quality control. A number of regulatory agencies are based in Asia Pacific, such as the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan, the Ministry of Food and Drug Safety (MFDS) in South Korea, the Therapeutic Goods Administration (TGA) in Australia, and the Singapore Health Sciences Authority (HSA) in Singapore. These groups make sure that the best quality pharmaceuticals are produced in their countries. This further promotes regional market expansion.
China is regarded as one of the biggest industrial centers in the world. It is also one of the most economical places in the world to manufacture goods. Products manufactured in China are 5% less expensive than those created in the United States, but those constructed or assembled in Europe are a startling 10%–20% more expensive. Compared to Western countries, labor costs are significantly cheaper in China. Workers in the United States are paid USD 35.96 per hour, while those in China are paid USD 11.90. The Chinese CDMO market is supported by all of these reasons. In 2019, 176 million people were 65 years of age or older, and by 2040, 402 million people would be over 60, or over 28% of the global population. It is anticipated that the country's need for pharmaceutical contract development and manufacturing operations will expand in the post-pandemic era due to the aging population.
The pharmaceutical industry in India has expanded over the last several decades and presently contributes around 1.72% of the nation's GDP. The Indian pharmaceutical industry is expected to grow to $130 billion by 2030 and $65 billion by 2024. Active pharmaceutical ingredients, or APIs, hold a significant portion of the pharmaceutical industry, accounting for about 35% of the market. In terms of API manufacturing, India comes in third place with an 8% market share in the worldwide API sector. Over 500 different APIs are produced in India, which also produces 57% of the APIs on the WHO prequalified list.
Europe is expected to be significantly growing in the small molecule CDMO market during the forecast period. One of the top locations in the world for cutting-edge technology and established infrastructure is Europe, which has enhanced patient care facilities and the healthcare industry. Because of the strict regulations in this area, the market is anticipated to expand profitably. Significant changes to the region's regulatory environment are also anticipated, which might have an impact on market entrance or access. Furthermore, the area is home to a number of CDMO market participants who offer global outsourcing services.
Almost every European nation has at least one API production site. With 63 locations, Italy has the most production sites, followed by Germany with 54 sites. As one of the biggest pharmaceutical markets in Europe, Germany gains from a strong ecosystem for research and development as well as rigorous regulatory frameworks that support innovation. The market is distinguished by the substantial presence of pharmaceutical producers, both local and foreign, who make large investments in the development of active pharmaceutical ingredients (APIs) to meet the needs of a broad spectrum of therapeutic applications.
The biological sciences in the UK have a long and solid reputation. Its universities are among the best in the world, and its researchers produce more papers than those in the USA and China combined. With an annual gross value added (GVA) to the economy of over £15 billion and 70,000 employees, the pharmaceutical business is one of the most important industrial sectors in the United Kingdom. An additional £4 billion in GVA is spent on biopharma research annually. GSK and AstraZeneca, two of the biggest pharmaceutical corporations in the world, as well as a vast number of smaller R&D-active businesses, are based in the UK.
In October 2024, according to Thermo Fisher Scientific, Accelerator Drug Development is being launched. Michael Shafer, executive vice president and president of biopharma services at Thermo Fisher Scientific, stated in a press release that the company is revolutionizing drug development and manufacturing procedures to help clients advance vital programs to quickly, effectively, and efficiently address global health concerns.
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