State of the Industry 2026 Virtual Panel: Drug Product

Tim Compton (TC): 2024 was an unusual year. Coming out of the gate, there was a lot of uncertainty: what would happen with the Catalent–Novo transaction, how the Biosecure Act would play out, and what a change in administration might mean for the industry. Many companies seemed to be sitting on the sidelines, waiting for clarity. We grew at Alcami, but not as much as we had hoped.

By contrast, 2025 has felt very different. We’re seeing strong tailwinds, especially as a U.S.-based supplier for sterile fill/finish and oral solid dose manufacturing. Hardly a week goes by without inquiries from companies looking to transition manufacturing from overseas to the United States. That includes new customers as well as existing customers consolidating footprints. Add to that a more deal-friendly administration and a busy M&A landscape, and it’s been a strong year so far. We don’t expect any slow down in 2026.

TC: Stronger on the sterile side, though we’re seeing interest in both. It may partly reflect Alcami’s scale and capacity in sterile manufacturing — we currently have one pre-filled syringe line and multiple vial filling and lyophilization lines in Research Triangle Park, NC, and Charleston, SC, along with our oral solid dose facility in Wilmington, North Carolina.

Danny Spurgin (DS): On the advanced therapies side, we see a mixture of activity, but with most of our business being a sterile injectable format, we have not seen a change to oral dosing. Most of our customers are early-stage biotechs whose progress is tied directly to fundraising, and fundraising is down about 20% year-over-year in Boston, still the hub for advanced therapies. Interestingly, we’re seeing increasing momentum in Europe, particularly for mRNA, as ex-US regions start to bolster areas left unfunded by traditional US government sources.

Customer behavior is shifting, too. Instead of signing larger end-to-end contracts, clients are breaking work into smaller milestones to conserve cash. There’s still plenty of activity in the U.S., but more than usual is coming from large biopharma companies entering the advanced therapies space, rather than the classic academic spin-out/start-up model.

Ian Lafferty (IL): From the U.K. perspective, I’d echo that U.S. policy shifts have created real nervousness. We’ve long had a substantial U.S. client base, but some of those companies have withdrawn programs or pulled back due to funding pressures. On the positive side, we’re seeing growth in European innovator projects, particularly in biologics and sterile products, and we’ve recently added sterile manufacturing ourselves. Another notable trend is demand for 505(b)(2) programs, especially around nasal drug delivery. But overall, yes, the U.S. environment has been a source of caution.

Rod Ketner (RK): On the oral side, we’re seeing a steady stream of projects moving out of China and into the U.S., usually around phase I. Sometimes it’s a straight tech transfer of an identical formulation, but more often it’s what I’d call a “rescue mission” — a phase I formulation that’s underperforming in terms of bioavailability, PK, or manufacturability.

That trend has been accelerating since the second half of last year and it’s very much tied to the funding environment. If a company doesn’t have clinical data, it won’t get the next round of financing. That urgency is driving the push for rapid clinical entry, often through smaller, milestone-based programs.

Laura Iorio (LI): We’re seeing the same increase in inquiries that others have mentioned. If I look back to 2024, there was a lot of uncertainty — especially as we moved into the election cycle —that created a real slowdown in new requests. Clients weren’t sure which direction things would go.

By contrast, 2025 has been very different. We’re hearing not only from existing customers but also from companies we didn’t even know were looking for our services. Somehow, they’re finding us, and we’re seeing more complex projects come through. In some cases, companies are coming in with multiple projects and looking to bring them to us over time. Just this week a client told me, “We’ve got another one right after the first,” which is obviously encouraging.

That said, I don’t love the instability we’re seeing from the FDA and DEA. Earlier this year, for example, we had to navigate some DEA-related challenges, and several of our clients and suppliers are feeling those regulatory pressures as well. It’s a reminder of how much government policy can shape the industry.

From a capacity standpoint, Tedor is still a small organization. We can’t take on everything at once, so we’re pacing ourselves, phasing projects in, and staying in close communication with clients about what’s realistic. My quotations team is overworked — in a good way — and we’re also seeing higher-potency compounds come in, which has pushed us to put together new OEL packages.

It’s a very different mix of work compared with just a year or two ago, when most of what came through the door were commercial transfers from long-term generic clients. We’re even seeing nutraceutical projects, which we now vet carefully for budget and fit. So, while at times it feels hectic, it’s overall a very positive trend for us.

Additionally, we’re seeing fewer formulations initiated in the U.S. Instead, clients often do formulation work ex-U.S., especially in India or Asia, and then transfer the commercial production to us. We believe potential tariff consequences are driving that behavior. Having been in the industry for 20 years — and my family for four generations — we’ve seen cycles like this before. Right now, the pendulum seems to be swinging back toward U.S. manufacturing, and that’s creating real momentum for companies like ours.

IL: In the UK, one of the major drivers right now is regulation. The new Annex 1 guidelines have pushed aseptic operators to re-evaluate their facilities. Many companies are questioning whether their existing fill/finish sites will meet the requirements going forward, and that has created demand for newer, compliant capacity. At Upperton, our new sterile facility was designed against those updated regulations, and that has been a huge advantage in attracting interest. The shift has really been one of the biggest talking points here in the U.K.

TC: From the U.S. perspective, we’ve also seen a strong uptick in demand for sterile fill/finish. Alcami has steadily added capacity over the years; we started with a single line in Charleston back in 2001, and soon we’ll be running six lines. That expansion within FDA-inspected facilities producing clinical and commercial products provides customers comfort in their decision to partner with Alcami.

Industry-wide, new capacity is coming online globally, but green fielding a new sterile site is always challenging. No company wants to be the first customer at a facility without an inspection track record. With the stringent regulations around sterile manufacturing, utilization of that new capacity can lag. By contrast, when we add new lines to existing, inspected sites, we can ramp utilization more quickly.

DS: In advanced therapies, fill/finish is a bit of a paradox. Very few of these products are commercialized at large scale yet, but customers still want assurance that their CDMO partner can support them from as basic as small manual fills all the way up to blockbuster volumes on high-speed automated lines. That’s why, being part of a broader network matters. At our three advanced bio sites, we can cover a range of specialized bioformats, but we can also point to Recipharm’s large-scale fill/finish capacity in Wasserburg, Germany. Even if a customer never needs that particular capacity, simply knowing it exists provides a level of comfort and confidence.

TC: For us, one big shift has been around capital equipment. Most of us on this panel are in some stage of expansion, so the question becomes: where is that equipment coming from, and what’s the true cost once tariffs are factored in? In manufacturing, we’re looking carefully at which countries our components and raw materials are coming from. That level of scrutiny simply wasn’t part of the conversation a couple of years ago.

RK: We’re expanding into a commercial facility, and tariffs weigh heavily on the cost of procurement. At the same time, the opportunity is real: we’re fielding serious interest from innovators that want their future commercial supplies made in the U.S. The challenge is, until those interest levels turn into signed term sheets, the political and economic uncertainties remain a headwind.

LI: For a company our size, it’s unpredictable in ways I wouldn’t have imagined even a few years ago. Stainless steel is a perfect example — who would have thought it would become a tariff target? Much of our equipment is stainless steel, and suddenly we’re tracking swings of 25–30% in costs. We’re trying to source domestically where possible, but suppliers themselves are shifting strategies, moving inventory quickly because they don’t know what tariffs will look like next month.

It’s the same with raw materials. For many APIs and excipients, there simply isn’t a U.S. source, so we’re dependent on ex-U.S. procurement. Building a domestic supply chain for those could take years, if it ever happens. And as contract manufacturers, we carry the responsibility of maintaining quality in one of the most complex industries out there. We can’t plan well in advance when pricing is uncertain, and that makes it harder to guarantee supply for our clients. During COVID the problem was timing—containers stuck offshore. Today, the timing may be predictable, but the pricing is not, and that’s equally disruptive, especially for our generic clients where margins are already razor-thin.

DS: In advanced therapies, the picture looks a little different. Most of our facilities are single-use, so our supply chains revolve around flow paths, tubing, and other consumables. Much of that manufacturing and final assembly already happens in the U.S.. That means we see less volatility in availability, but the consumables are expensive to begin with. Any price bump gets amplified significantly, and those costs ultimately flow down to clients who are already very cost-sensitive. It’s not so much about uncertainty in our case; it’s more about how even small shifts in consumables pricing quickly snowball into a bigger COGS challenge for new medicines.

DS: We’ve built an internal product group we call RecImagine that’s driving continuous manufacturing for mRNA. By the end of this year, we expect to have our GMP platform commissioned, enabling us to go from IVT to fill-finish in a single day. Traditionally, that process takes months.

It’s all about marrying process analog technologies with PAT and centralized digital control, so development and manufacturing flow continuously instead of stop/start. We’re also building simulated process-development models that use the same data to generate “recipes” digitally, moving away from trial-and-error DOE toward verifying in the physical world what we’ve already mapped virtually.

There’s excitement around this, especially from NGOs and the Gates Foundation, which has provided grants to advance PAT and Artificial Intelligence further. The hesitation is that commercial clients are wary of being the first mover, but the technology works, and the potential to collapse timelines and costs is enormous.

RK: On the oral side, we’re seeing a different kind of capacity challenge. There simply aren’t enough spray-drying resources in the U.S. for what’s coming, particularly if oral GLP-1s advance further. These molecules almost always require enabling technologies like amorphous dispersions, and while expectations have tempered recently, the reality is that if a blockbuster oral GLP-1 advances, there isn’t enough spray-dry capacity globally to supply it.

While spray drying isn’t new, it’s increasingly a strategic investment area. We’re still seeing four to five products approved annually that rely on it, and demand is only rising. From our vantage point, it’s lower risk than betting on unproven platforms, but no less transformative for enabling pipelines to move forward.

TC: On the sterile side, one of the most important decisions is around isolator versus RABS technology. We’ve taken a clear position: all five of our new lines are isolator-based, Annex 1 compliant, and we run PUPSIT (pre-use post-sterilization integrity testing) routinely. Some facilities are still building large-scale RABS systems, but we see isolators as the more forward-looking bet for growth. It’s not a radical technology shift — it’s a regulatory- and quality-driven one — but those choices determine agility and compliance for the next decade.

IL: We’re making similar investments — VHP isolators and more spray dryers. The bigger surprise for us has been in nasal drug delivery, which is becoming a real differentiator. The formulations are progressing toward registration, but the equipment ecosystem to actually fill and assemble these devices is lagging badly.

Even working with the big device companies, you find there’s little fill/finish capacity available, and what does exist is still relatively slow — think five milligrams of powder per device with multiple manual assembly steps. There’s a gap in CDMO capabilities here, and we’ve had to design equipment and processes ourselves from scratch to keep programs moving.

DS: We’ve taken the approach of building our own AI models using only our internal data, keeping it tightly controlled so it’s truly “good in, good out.” That allows us to develop predictive analytics directly tied to our own processes. Over time, we’re building a knowledge hub or data lake that customers can also leverage for predictive process parameters and both predictive and in-line analytics. The more data we feed in, the better our predictive controls get, which in turn enables real-time release and real-time decision-making.

For example, once the AI recognizes that a target endpoint has been achieved in one unit operation, it can immediately progress to the next step without waiting for manual intervention. That’s already shaving time off of processes. To me, the most exciting thing is the potential for AI to automate decision-making in manufacturing, not just process monitoring. Discovery gets most of the attention and investment, but for us, AI is becoming a practical tool for operational efficiency.

TC: We’ve focused on integrating our data through a new SAP system rolled out earlier this year. That gives us the ability to apply AI for smarter supply chain management: forecasting demand, optimizing ordering patterns, and improving both commercial and clinical manufacturing scheduling. It’s about making better decisions with a consistent data set.

RK: We see the low-hanging fruit in automating routine tasks: documentation, report preparation, that sort of thing. There’s some exploration of predictive tools for formulation development, but the immediate return is in removing repetitive manual work and freeing our scientists to focus on higher-value activities.

LI: I’ve been looking more at the commercial side of the business. Every time I get one of those aggressive robocalls, I think about how effectively they’ve found me. Not that I want to adopt that exact approach, but I do wonder how we can better position ourselves in front of potential clients in a smarter, more targeted way. Right now, my interest in AI is more around sales, marketing, and business development than in the lab.

DS: We have started experimenting with AI tools that assist in proposal writing. That makes sense when you have repetitive, templated tasks. But in advanced therapies, everything is still so nuanced that most of what we do requires human judgment and bespoke discussions. The industry isn’t yet mature enough for wholesale automation.

TC: One of the biggest shifts we’ve seen is in batch sizes. Historically, the question was always, “How big can you make a batch?” We still have that capability, with up to 1,000-liter batches in our Charleston facility. But increasingly, the question is, “How small can you go?” Can you do less than two liters, even less than one liter? That’s a question we get far more often now, particularly at our RTP, NC site, where we use all single-use componentry and built for low line loss.

This trend is directly tied to advanced therapies and rare-disease programs. The economics and patient populations make very small batches essential, which is a complete reversal of how customers approached us five or 10 years ago.

DS: Part of the challenge here is hold-up volumes. When you’re producing an incredibly expensive therapy at a very small dose, even a small amount of product left in the lines becomes a serious economic issue. But the other challenge is how you can process these formulations with the appropriate controls (agitation, temperature, etc.) Reducing hold-up volumes and controlling sensitive formulation processes is something we and others are acutely focused on.

TC: On our side, we try to minimize loss by selecting the optimal filter size, inline weight checks, and non-destructive container closure integrity testing. Every vial is valuable, and anything we can do to increase yield through the process helps innovators get as much of their precious drug substance into the finished vials as possible.

TC: From our side, nothing new per se, but I do get the sense that Annex 1 isn’t being consistently applied across the industry. When we’re in a conference room with a customer and they ask whether we’re Annex 1–compliant and if we run PUPSIT on every fill, they’re often surprised when we tell them yes, it’s routine for us. That makes me wonder how many CDMOs are actually implementing it fully.

IL: I share that experience. I still find surprising confusion in the marketplace. Annex 1 is fairly clear that PUPSIT is now required, and while I spent much of my career arguing against its relevance at the early phase, that debate is over. It’s no longer optional.

I recently had a client who told me that the MHRA had just advised them it wasn’t required for small-batch sizes. That contradiction illustrates the uncertainty: until inspectors themselves are fully aligned, companies will hear mixed messages. In my view, the safest course is to comply and avoid having to defend exceptions later.

That said, I also see opportunity here. If you can demonstrate that your facility is Annex 1–compliant and you’re proactively applying the new standards, you’re differentiating yourself in a crowded marketplace.

IL: For us, it has become a real differentiator. More and more, sustainability is a factor in whether clients even consider us. Half of every RFI now seems to be devoted to ESG: what commitments we’ve signed, what plans we have in place, what numbers we can share on carbon reduction. We’ve had to take that very seriously. We now employ two ESG apprentices and are moving forward with a formal carbon reduction plan. In drug delivery specifically, we’ve also seen clients changing devices, shifting to reloadable formats over single use to align with their sustainability priorities.

RK: I’ll be blunt: here in the U.S., it rarely comes up. Clients aren’t asking.

LI: I agree. In the U.S. there’s much less interest in sustainability as a purchasing driver, at least in our corner of the market. That doesn’t mean we don’t care. For example, we’ve won awards for protecting the Narragansett Bay and take our environmental responsibilities very seriously. But clients aren’t pushing it, and frankly, it sometimes feels like sustainability is losing traction here.

RK: I’d expect it would.

TC: We do see it, mostly from larger, often European-based organizations. For us it’s about defining our footprint and looking for ways to reduce it. But I think the bigger ESG challenges lie more in API chemical synthesis than in drug product manufacturing — OSD and sterile operations don’t carry quite the same sustainability footprint.

IL: From our perspective, it’s definitely European-driven, but it’s across the board, even small innovators. Often, it’s investor pressure. Their investors have ESG mandates, so the companies have to push those expectations down to us.

TC: That’s a great point. Private equity and investor groups are increasingly applying top-down ESG requirements across their portfolios, so CDMOs need to adapt at some level.

LI: Maybe we should all start treating ESG as a marketing opportunity.

IL: We already do. Our investors demand ESG strategies across all their holdings, and we’ve found it valuable to use those efforts as part of our positioning in the market.

RK: While sustainability isn’t yet a primary driver in conversations with many of our U.S. clients, we take it seriously as a company. We’re actively investing in internal initiatives and exploring more sustainable processes across our operations. Our view is that sustainability is not just a trend, but a long-term imperative — and we’re committed to staying ahead of the curve so we’re ready when client expectations and regulatory landscapes evolve.

DS: In advanced therapies, customers tend to prefer integrated solutions if they have confidence in the quality. If they don’t, they’ll split work across multiple partners. For us, partnerships are also a way to expand what we can offer. A good example is our relationship with Hongene, which allows us to manufacture single-guide RNA here in the U.S. for gene editing applications. By combining our GMP capabilities with their raw materials, we’ve opened new market opportunities for a specialized customer market. More broadly, we try to establish alliances early.evaluating new technologies ahead of public launch so we can hit the ground running when a customer comes in with something novel.

IL: At our earlier-phase scale, it really still comes down to trust and expertise. Most new projects come to us because clients have been disappointed elsewhere. It’s the same story we’ve always seen: if they believe you can innovate with the right quality and speed, they’ll stay. If they lose that trust, they’ll leave… and sometimes circle back later.

DS: The boomerang effect. Especially now, it’s more of a buyer’s market. Sponsors are negotiating hard on price and timelines. Some will chase cheaper promises, but they often return when finding that bargain does not equal value.

LI: We position ourselves the same way, as experts with a strong track record. But lately we’ve also seen customers pushing harder on price and deliverability, not just trust. The silver lining is that word-of-mouth has been powerful for us. We’re getting new business because other clients recommend us, which speaks to the quality of our team and responsiveness.

One specific trend I’ll mention is packaging. We’ve seen a surge in requests for blister packs — sometimes complex ones — rather than just bottles. I suspect it’s tied to how products are sold into different markets, but it’s definitely new for us.

TC: We’ve noticed that as well. In Wilmington, we operate two blister lines, and demand for them has grown, perhaps linked to European sponsors who are accustomed to blister packaging.

IL: We have seen the same trend.

DS: We benefit from being in hubs. Our sites in Boston, Lisbon, and Germany give us access to strong talent pools, whether we need a CMC scientist, an MSAT expert, or another specialized role. It makes the operating in those regions worthwhile, because the expertise is there when we need it.

LI: We’ve experienced the ebb and flow of the greater Boston ecosystem. Being about an hour outside the city, we’re close enough to benefit from shifts in biotech and other manufacturing sectors. We try to hire early when layoffs or contractions happen, because that’s when you get high-quality candidates entering the market all at once. Many of the talented individuals we’ve brought on recently weren’t necessarily looking for new opportunities; it was just a consequence of economic slowdowns or reduced innovation activity.

DS: We really value when team members come from the innovator side. Having employees who used to sit on the other side of the table gives clients extra confidence in our ability to anticipate their needs and challenges.

IL: We’re fortunate to be based near three universities and a number of CDMOs. While some of our neighbors are shrinking or uncertain, we’re growing, which has given us access to both new graduates and experienced scientists. The real pinch point for us isn’t scientific staff; it’s quality assurance personnel. There’s a definite shortage there, and that’s where recruitment is hardest.

LI: During COVID, we were right next to Amgen, and they just pulled away all of our people. We couldn’t stop it — they were hiring aggressively for both testing labs and manufacturing, and we weren’t front and center in the vaccine race. Being in the greater Boston area didn’t help, because people were being paid many dollars more per hour than we could offer.

Now, with the uncertainty and some of the geopolitical visa challenges, the dynamic is a little different. Historically, we’ve had a lot of formulators from India, but recently we’re seeing fewer applications overall. We’re hiring more locally in the Greater Boston area for the solid-dose space, and we just brought on a great formulator who came directly from the innovator side. That’s the type of person we wouldn’t have seen on the job market 24 months ago. The ebb and flow of the hub change the candidate pool over time.

IL: I think the most important thing you can invest in is your people. Equipment is essential, of course, but the time and effort it takes to train staff in your culture, your quality standards, and your customer-first mindset is enormous. Retention is more important than recruitment.

In Europe, employees expect a lot more than just a salary. To retain them, you need programs that address wellness and mental health, governance and support structures, and even ESG initiatives that go beyond environmental sustainability. Staff want to see that you’re committed to treating them well. If you build that culture and retain your people, you’ll always be in a stronger position than if you’re constantly replacing them.

RK: We continue to see growth in more complex molecules, including higher-molecular-weight small molecules and heterobifunctional modalities like PROTACs. These are challenging our formulation teams, but they’re also moving quickly through pipelines. None are commercial yet, but some programs are close. The pipeline is incredibly rich, and I expect continued demand for innovation in oral drug delivery, particularly technologies that balance innovation with manufacturability. Patient-centric formulations will also remain a major driver.

IL: We are seeing a real surge of interest in long-acting injectables, in client inquiries and across industry forums. It’s becoming such a priority that even as we bring one facility online, we’re already planning expansions to support this area.

LI: I recently had an inquiry for large-scale tray drying, not the most innovative technology, but interesting in its resurgence. In this case, it was related to GLP-1s and other innovators relying on tray drying for their processes. We have a large lyophilized tray dryer, which made us a fit for that inquiry. Of course, spray drying is also relevant here, but it was notable to see tray drying mentioned as a preferred approach.

TC: In sterile fill/finish, the trend is clear: more new opportunities are large molecules: biologics, oligos, or pseudo-large molecules. I’d say about six to seven out of 10 fill/finish requests that we receive fall into that category. To support this, we’re expanding our biologics analytical capabilities in RTP, while continuing to grow our Wilmington operations for OSD and pseudo-large molecules.

DS: From our vantage point, macroeconomics are a major concern. The pressure on advanced therapies goes far beyond mRNA and vaccines; it’s affecting investment across the space. We still see ourselves as the most innovative and flexible CDMO, and we stay true to that — adapting, staying hungry, and waiting for patient-impacting successes to drive many of our customers’ pipelines forward.

RK: One challenge we recently faced was getting clinical drug product into China, not out of it. The Chinese IND process is extremely detailed and surprisingly difficult to navigate. It was a bigger hurdle than expected and definitely a learning experience.

LI: We’ve had a similar situation with a commercial client importing back into China. Their logistics route has already changed multiple times, from initially planning to go through Canada, then Hong Kong, before settling on another approach. We don’t manage the logistics directly, but from the manufacturing side we’ve seen just how complex and shifting the regulatory landscape can be.

IL: Another area we’re seeing momentum in is psychedelics. It comes in waves, but right now we have three or four active programs in-house. Whether it’s a funding-driven trend or something deeper, there’s definitely renewed interest and innovation there.

TC: We’re also seeing more activity in the Schedule I space, particularly oral solid dosage. Beyond that, one area we haven’t touched on is storage. Our pharma storage business often acts as a leading indicator of manufacturing trends, as we see materials coming into the U.S. before a domestic supplier is even lined up. We’ve built one of the largest cold-chain storage networks among CDMOs in the country, with capacity ranging from single master and working cell banks to hundreds of pallets at minus eighty (–80)°C and thousands of GMP pallets at ambient/CRT. The demand for secure, large-scale storage is accelerating, especially in biologics and advanced therapies.

LI: We’re also seeing that DEA Schedule I trend. I’d add cannabis to the discussion. Right now, it’s under-regulated — dangerously so, I’d argue — but there’s enormous potential. I think that once cannabis is rescheduled, there will be more serious pharmaceutical development around both naturally grown strains and synthetic analogs. AI could even play a role in mapping and tracking different active compounds. Combined with the billions already flowing into psychedelics research, I see real opportunity in this broader space, and we’re positioning ourselves to capture it.

For a full picture of how upstream development, manufacturing capacity, pricing, and policy forces intersect, read the complete Nice Insight 2026 State of the Industry report.