What are the key issues shaping the market for small-molecule drugs and related trends in manufacturing? An industry roundtable of senior executives share their perspectives on what is driving the market.

Moderated by Patricia Van Arnum, Editorial Director, DCAT, pvanarnum@dcat.org

What’s in store for 2025?
DCAT Value Chain Insights tapped into the expertise of senior executives from CDMOs to gain their views on the key issues shaping development and manufacturing of small-molecule active pharmaceutical ingredients (APIs). Common themes emerged across a spectrum of topics: from increasingly more complex drugs and manufacturing processes, as evidenced by the success of glucagon-like peptide-1 (GLP-1) agonists, to the continued rise of antibody drug conjugates (ADCs), to the increased emphasis on sustainability and advanced technologies, including AI, to greater pressures and uncertainties on supply chains and potentially ensuing geographic shifts in supply lines.

Participating in ther roundtable were: Martin Meeson, Chief Executive Officer (CEO), Axplora; Claudio Russolo, Chief Operating Officer, Drug Substance, and Matthew Bio, Chief Scientific Officer, Cambrex; Jan Vertommen, PhD, Vice President, Head of Commercial Development, Small Molecules Division, Lonza; Paolo Tubertini, CEO, Olon Group; Peter Kienholz, Global Head of Business Excellence and Corporate Projects, Siegfried AG; and Rohtash Kumar, PhD., Senior Vice President of Development Operations and Chief Technology Officer, Veranova. 

Q:  What do you see as the three top issues driving the CDMO market for small-molecule API development and manufacturing in 2025? 

Meeson (Axplora): First, the continued rising demand for complex APIs, particularly in areas such as GLP-1 receptor agonists for metabolic disorders and antibody-drug conjugates (ADCs) for oncology, will increase the need for advanced manufacturing expertise and specialized facilities. GLP-1 and ADCs highlight contrasting yet equally demanding requirements in API manufacturing, with GLP-1s needing intricate peptide synthesis, often involving dozens to hundreds of chemical steps, coupled with exceptionally high-purity standards and the ability to produce at massive scales exceeding 100 metric tons. In stark contrast, ADCs merge small molecules with biologics, requiring specialized facilities to manage highly potent and cytotoxic compounds, emphasizing precision and containment over sheer volume. 

Second, geopolitical changes are emphasizing supply-chain resilience, prompting a shift toward regional production and robust quality systems to ensure security of supply. Lastly, sustainability is becoming a critical driver as both regulatory pressures and customer demands for greener chemistry grow.  

Russolo (Cambrex): Sustainability, supply-chain resilience, and the growing complexity of synthetic APIs are a few of the top issues that we see driving the CDMO market for small-molecule therapies in 2025. As pharmaceutical innovators increasingly focus on improving the sustainability of their businesses, many are exploring the opportunity to reduce the environmental impact of their API manufacturing by developing efficient processes, whether sourced internally or with partner CDMOs.  

In addition, the demand for resilient supply chains will continue to be a significant market driver. Pharmaceutical companies are increasingly prioritizing partnerships with CDMOs that offer regional manufacturing capabilities and reduced dependence on a single region. Lastly, synthetic APIs in clinical development are continually increasing in complexity. The renewed interest in peptides, coupled with the large volume demand for peptide-based therapies, is a primary example of the increasing complexity of synthetic APIs.  

Vertommen (Lonza): The CDMO market for small-molecule API development and manufacturing in 2025 is driven by several key issues. Firstly, the increasing complexity of chemical structures, particularly highly potent molecules, poses significant challenges. These molecules often require specialized facilities and longer manufacturing times due to their intricate nature and the need for stringent handling protocols. This trend is largely driven by the push to develop new cancer treatments and other advanced therapies.   

Secondly, a substantial proportion of new drug candidates suffer from poor solubility, which is a critical factor for their effectiveness. It is estimated that 70% to 80% of pipeline drugs in development today are poorly soluble. To address this, various enabling technologies have been developed to enhance the solubility and bioavailability of APIs, ensuring they can be effectively absorbed by the body.  

Lastly, there is an increasing number of drugs being developed under expedited regulatory pathways, which require faster development timelines and more comprehensive data at earlier stages. This accelerates the development process but also increases the risk, particularly for smaller companies that may lack the resources to meet these demands. The need to balance speed with thoroughness in data collection and analysis poses a significant challenge. 

Tubertini (Olon):  Firstly, the supply chain globalization and resilience. The growing need to reduce dependence on single global suppliers, particularly China and India, is driving a regionalization of manufacturing. CDMOs are investing in local capabilities to ensure business continuity and minimize disruption risks. I can see as further major market trend of technological innovation and sustainability. The great push towards more sustainable manufacturing, through advanced synthesis technologies and ‘green’ processes, such as enzymatic catalysis, is reshaping CDMO operations. 

Kienholz (Siegfried): The CDMO market is increasingly shaped by the growing structural complexity of molecules, the acceleration of development timelines, and the challenges posed by global economic and geopolitical pressures. Molecules are becoming harder to synthesize due to complex structures, such as multiple chiral centers and challenging functional groups. Development timelines are tightening, particularly for oncology drugs, with many receiving expedited approvals. At the same time, geopolitical and fiscal challenges are adding to the complexity of managing supply chains and production. 

Kumar (Veranova): The rise in chronic diseases and the push for innovative therapies are driving demand for highly potent APIs (HPAPIs) and complex small molecules. In addition, the race to launch innovative therapies demands shorter development timelines. Digitalization, including AI-driven process optimization and data integration, is a game-changer by streamlining workflows and leveraging predictive analytics.  

In addition, as drug molecules grow more complex, requiring higher molecular weights and greater stereoselectivity, CDMOs must adopt cutting-edge technologies to stay competitive. Advanced analytical tools, continuous manufacturing systems, and specialized equipment for handling challenging APIs are no longer optional—they are key differentiators. Peptides and oligonucleotides are emerging as a ‘middle zone’ between biologics and small molecules, offering the advantages of both. Like biologics, they exhibit high binding affinity and selectivity while their low molecular weight enables effective tissue penetration, similar to small molecules.  

Q: From a manufacturing capacity view, how would you characterize the market on a commercial scale? From a clinical scale? What factors are influencing industry capacity utilization overall? 

Vertommen (Lonza): First of all, small molecules remain an attractive and growing market with 52% of all molecules in clinical development comprised of small molecules (approximately 10,000 molecules). In the next five years, the clinical market for the number of small molecules is estimated to grow by 30%. Therefore, the demand for clinical- and commercial-scale manufacturing capacity is expected to remain strong and will require additional capacity.  

We are observing a few trends in the market driving investments in small-molecule capabilities and capacity. One example is that many of the newly approved oncology and rare disease products require smaller commercial drug-substance quantities. Therefore, new drug-substance-related investments are sized to these volumes with reactors of 4 to 6 m³ capable of handling highly potent compounds compared to 10 m³ standard reactors built in the past.   

A notable exception to this trend are the GLP-1-related medicines under development targeting the weight-loss market. These medicines will require larger reactor investments to meet the projected drug substance demand.  

Within the oncology space, the success of ADCs forms a specific trend requiring additional investments in high-containment development and manufacturing facilities for the cytotoxic payload drug portion of these ADCs. 

Meeson (Axplora): On a commercial scale, the market is constrained by limited capacity due to the growing demand for specialized APIs, such as GLP-1 receptor agonists and ADCs. These products require advanced manufacturing technologies and facilities capable of handling large volumes and complex processes, leading to bottlenecks in meeting demand. On a clinical scale, agility and speed are critical, as early-phase projects often require multi-purpose facilities to manage smaller, more complex batches. Overall, industry capacity utilization is influenced by the rising demand for complex APIs, the need for modernized technologies, and the unpredictability of clinical and commercial project timelines, which pose challenges for ensuring flexibility and efficiency in manufacturing operations. 

Bio (Cambrex): From a commercial-scale manufacturing capacity perspective, the market is experiencing tight capacity constraints as more pharmaceutical companies seek to secure dual API supply chains for the US and European markets. CDMOs are reacting to rising capacity demand through investments in facilities and advanced manufacturing technologies, but the lead times for new capacity to come on line, combined with global supply-chain challenges, are influencing the market’s ability to scale rapidly.  

For clinical manufacturing, capacity is generally more available for traditional small-molecule APIs. However, the rapid pace of drug development, especially for orphan drugs and personalized medicines, is putting pressure on development timelines.  

Tubertini (Olon): The commercial-scale market is undergoing a period of consolidation. While large CDMOs are focusing on high-volume, high-complexity manufacturing, smaller companies are targeting specific niches. Excess capacity in some areas (e.g. generic manufacturing) is offset by a shortage of capacity for cutting-edge technologies. On the clinical front, the growing demand for speed in trials is putting pressure on CDMOs to accelerate development and ensure flexible capacity. Capacity utilization is strongly influenced by the rise of orphan drugs, the growth of personalized medicines, and the need for speed in the transition from the clinical to commercial phase. We detect a general reduction of early-stage projects, due to the difficulty in accessing capital by biotech startups, a greater caution by investors, who focus on more advanced and less risky projects.  

Kumar (Veranova): The commercial-scale manufacturing market is witnessing a rapid growth in investments in specialized capabilities, particularly for HPAPIs and other complex molecules, such as oligos and peptides. Meanwhile, clinical-scale manufacturing is adapting to shorter development timelines and expedited regulatory pathways, emphasizing flexibility and speed. Key factors influencing capacity utilization include the rise in smaller, targeted batches for niche therapies and personalized medicines, the growing complexity of APIs, and the demand for advanced manufacturing technologies such as continuous processing and process intensification.  

Q: From a macro view, what external factors—such as trade policy or legislative/regulatory changes—will be impactful to the small-molecule drug market in 2025 and why? 

Meeson (Axplora): External factors, including legislative and regulatory changes, will play a significant role in shaping the small-molecule drug market. The Biosecure Act, which aims to secure US pharmaceutical supply chains by promoting domestic production of essential drugs, will create new opportunities for CDMOs with a U.S. footprint or those capable of meeting updated sourcing and compliance requirements. Additionally, global harmonization of standards, such as the adoption of ICH guidelines, will streamline regulatory approvals across regions, fostering greater efficiency in bringing small-molecule drugs to market. 

Outside of the regulatory landscape, advances in digitalization and artificial intelligence (AI) will also have a transformative impact on the industry. AI-driven tools are accelerating drug discovery, optimizing manufacturing processes, and enhancing predictive capabilities. These technologies will allow companies to reduce development timelines, improve product quality, and remain competitive in an increasingly dynamic market. As digital innovation continues to evolve, it will become a cornerstone of success for the small-molecule drug sector. 

Russolo (Cambrex): Trade policies and regulatory frameworks will have a significant impact on the small-molecule drug market in 2025. Shifts in trade policies, including tariffs, import/export restrictions, and geopolitical tensions are driving pharmaceutical companies to reduce reliance on any one region for raw materials.  

Regulatory changes, particularly those related to environmental sustainability, are also highly influential.  Stricter standards, such as REACH [Registration, Evaluation, Authorization and Restriction of Chemicals] restrictions and carbon-reduction mandates in the European Union, are compelling CDMOs to adopt greener technologies across their manufacturing supply chains. These changes require proactive investments in sustainable practices and systems to ensure competitiveness and alignment with client and regulatory expectations. 

Vertommen (Lonza): The continued evolution and integration of artificial intelligence and machine learning will require regulatory agencies to collaborate with the industry and establish more detailed guidelines to ensure transparency, algorithm validation, and safety. New regulations on these technologies may initially slow drug development as authorities establish clear guidelines. However, once integrated, they can streamline approvals and reduce time to market by ensuring robust and reliable AI-driven processes. These regulations will also necessitate additional compliance steps, potentially increasing initial costs but ultimately leading to more efficient and cost-effective drug development.  

We also expect that pharmaceutical companies will continue to anticipate or react on trade policies or legislation in 2025. This implies a review of current supply chains to reduce involvement of certain countries in the complex supply chains.  

Tubertini (Olon): The trade tensions between the United States, Europe, and Asia will continue to impact the supply chain. Pressure to reduce dependence on Asian suppliers could drive investment in local facilities. Focusing on ESG [environmental, social and governance], pharmaceutical companies and CDMOs will be under increased pressure to comply with ESG standards, influencing both operational choices and the design of manufacturing processes. 

Kienholz (Siegfried): Trade policies, regulatory changes, and geopolitical dynamics will play pivotal roles in shaping the market. Shifts in trade agreements or tariffs can disrupt global supply chains, making diversified manufacturing networks essential. Regulatory developments, particularly around accelerated drug approvals, are compressing timelines and necessitating more agile chemistry, manufacturing, and controls (CMC) processes.  

Kumar (Veranova): The industry will face increased scrutiny over regulatory compliance, particularly for HPAPIs, oligonucleotides, peptides, and bioconjugates seeking expedited drug approvals. As more therapies utilize accelerated pathways, companies must deliver robust data earlier in development while maintaining patient safety and regulatory alignment. 

Trade policies affecting raw material sourcing and the global focus on environmental sustainability will also shape the market. Stricter regulations around carbon emissions and waste management will push CDMOs toward greener manufacturing practices. Meanwhile, geopolitical uncertainties could disrupt supply chains, emphasizing the need for localized production and agile supply-chain strategies.