State of the Industry 2026 Virtual Panel: Small Molecules

Andrew Mitchell (AM): From our perspective, demand has declined relative to two or three years ago. Back then, smaller clients often had multiple assets in the clinic at once, but today we see them focusing resources on a single lead program, largely because of financial pressures. There are some geopolitical influences as well, but financing is the main driver. The result is that sponsors are prioritizing getting a single asset across the finish line rather than investing in new ones.

David Simpson (DS): I can echo that, as a company with our own clinical portfolio. We’ve been very clear with our board and team that we are building licensing assets rather than planning to commercialize ourselves. That means that our relationships with CDMOs are intentionally short-term: we need processes that are phase I appropriate and ready for handoff once a partner takes over. It’s a transactional model. Funding today is nowhere near where it was three or four years ago. We’ve been fortunate to have a novel ADC payload that generates strong interest, but even so, we still face the same transactional hurdles before we can engage meaningfully with manufacturing partners.

Derek Hennecke (DH): After COVID, we saw de-stocking of inventories that created a significant dip in commercial demand. As that began to normalize, the impact of changes in NIH funding created another headwind. That said, there are some positive indicators — our CRO business, Everest, has performed very strongly over the past few months, which could signal a rebound. We’ve also seen similar positive momentum in the public filings of other CROs. So, while early-stage pipelines are clearly thinner, we may be reaching the bottom of the cycle and could begin to see growth again as programs advance into phase II and III.

George Hlass (GH): Uncertainty is pervasive for U.S. biotechs. Financing is part of it, but companies are also concerned about their ability to raise capital in the future. Even cash-rich companies are doubling down on their lead assets and shelving others. Policy dynamics add another layer of unpredictability. Tariffs can swing demand by driving sourcing decisions. In 2024, during the height of discussion around the Biosecure Act, most of the RFPs I saw were for projects moving out of China. Boards were nervous about the optics, so sponsors doubled down with existing vendors while exploring tech transfers elsewhere. That trend has quieted somewhat, but with policy uncertainty, it could easily resurface and reshape demand again.

DS: For us, the challenge is novel payloads. We often start with just preclinical data, so finding capacity that’s willing to take on that development risk is not easy — and it comes at a premium. We have some experience with PBDs and other highly potent compounds, but the real bottleneck is process development. The industry is moving beyond the familiar XRT-CAN and topo-driven ADCs, since resistance in the clinic makes them dead ends. The next wave of novel payloads is here, and advancing them requires genuine development work to scale from research into phase I. That’s where timelines stretch and costs mount — not simply running an established process but creating one.

DH: On the other hand, there’s good news for existing capacity, particularly in the U.S. Tariffs may not be high enough to drive major new infrastructure, but they’re enough to shift production back onshore. Companies that once manufactured in China and Europe are now looking at splitting production among Asia, Europe, and the U.S. That doesn’t create blockbuster volumes, but it helps fill existing capacity here and in Europe. It’s more about spreading risk and balancing global supply chains than driving major expansions.

TJ Higley (TJH): Capacity may not be scarce at the moment, but global policy shifts and new investment patterns bear watching. When innovators invest directly in facilities, it raises the question of where that leaves service providers. Are those in-house investments targeting high-complexity, hard-to-manufacture products, or do they cover the full spectrum? If the latter, it could create a glut of capacity. So, the challenge for service providers is differentiation: making sure we stand out in what’s already a very competitive market, even as innovators layer in their own capabilities.

AM: As a Canadian-based CDMO with a North American cost structure, we can’t really compete on plain, straightforward molecules at large scale; the economics just don’t work. This shift toward rare disease and small-population indications aligns well with our capabilities. Clients aren’t looking for metric tons; they’re looking for tens or hundreds of kilos. Those projects are definitely getting more complex. We’re seeing much more work involving conjugation with peptides, protein degraders, and similar modalities.

DS: For me it’s expertise, without question. With ADCs, the design space has gotten dramatically more complex. Ten years ago, I described it as a three-piece jigsaw puzzle. Now we’re dialing in 7–12 different components. That naturally makes manufacturing and conjugation riskier. We look for partners with deep platform expertise. We’ll stay with one provider for that platform, even if we break up the supply chain elsewhere. I’m not married to a one-roof solution, especially since so many CDMOs are stitched together through acquisition anyway.

TH: Expertise remains the key differentiator. But I’d add another piece: smart pre-screening. With PROTACs, molecular glues, and other complex small molecules, running solubility screens or other benchtop characterization at very low API quantities saves clients cost and time. At Microsize, we use that approach to inform particle engineering more intelligently before running full trials. The same logic applies across bioavailability-enhancing technologies. Having the ability to generate meaningful data with milligrams or grams of material stands out in this environment.

DS: I’ll just underline — capacity is not the selling point for us. An antibody payload might only need a 200-liter batch to carry us through all of phase I. It’s not about scale; it’s about getting the right quality output efficiently.

Marshall Crew (MC): I agree, though I’d add that perceived stability also matters. Over the last year, the CDMOs with stronger balance sheets — or at least the reputation for having staying power — have weathered the downturn better. Smaller players, even when they’re technically strong, have found it harder to compete. Financial credibility has quietly become a differentiator too.

MC: Multidisciplinary teams. The biggest challenge is assembling groups that not only have depth in their respective specialties but also work seamlessly together across disciplines.

GH: A couple of years ago, I was speaking with large pharma about ADC supply chains. At that point, there were maybe two players globally that were truly integrated end-to-end — payload, conjugation, fill/finish. That’s changing now. More companies have moved to fill gaps through acquisitions. Olon buying GTP Biologics is one example. The reason is clear: the ADC supply chain is inherently complex, and integration across all those nodes gives you a huge advantage.

AM: When we talk to clients, they consistently want payload, conjugation, and fill/finish in one place. They usually handle the mAb component internally or with a trusted supplier. But they don’t want the other pieces split across continents.

DS: As a smaller company, we centralize ADC drug substance, but then we’re forced to ship drug product — often from Europe — because reliable fill/finish for high-potency materials is scarce in the U.S. That’s a major pain point. Most CDMOs stop at drug substance, because the risk shifts back to us once material is in transit. But I can’t get into the clinic without drug product. Finding partners with both the expertise and the willingness to take on that risk remains one of our biggest challenges.

DH: David’s right — in the U.S., fill/finish capacity is still in short supply. The Catalent acquisition by Novo and the explosion of demand from GLP-1s have further tightened things. On top of that, the transition from vials to syringes is disrupting existing capacity, and Annex 1 compliance has rendered a lot of older facilities obsolete. We are investing, so eventually it’ll level out, but right now fill finish is one of the clearest bottlenecks in the supply chain.

DH: The “big three” remain oncology, metabolic diseases, and CNS. I’m concerned about rare diseases. That space has been important for smaller CDMOs, because volumes are low and development is often led by small companies, but the funding crunch has hit rare diseases hard, and the struggles in gene therapy are compounding that challenge.

TH: From a molecular perspective, one of the most notable shifts is the rise of “brick dust” molecules — BCS class IV compounds. For these, the challenge is no longer just solubility but permeability. Spray drying and hot-melt extrusion, which have worked so well for class II compounds, can fall short here. There’s no clear gold-standard technology for class IV yet, which is forcing sponsors and CDMOs to experiment with combinations of approaches. Particle size reduction, smart screening, and hybrid delivery systems are all being tested, but there is still a black box.

MC: Permeability is a real barrier. Molecules that don’t partition into lipids simply won’t cross membranes. To solve that, you need to introduce an enabling factor — whether that ends up being nanotechnology, novel excipients, or something else entirely. At this point, there isn’t a proven platform solution, which means genuine innovation is still required.

Another wrinkle is that injectables have become far more commonplace and accepted by patients. If oral delivery continues to falter for these difficult molecules, the industry may lean even harder into injectables as the practical workaround.

DH: Sal, what’s your read on continuous manufacturing: is it gaining traction, and have you noticed any real changes in the last six months or year?

Salvatore Mascia (SM): Absolutely. I’d highlight three key trends we’re seeing.

First, speed. Innovators are increasingly coming to us because they need to accelerate programs into the clinic and connect clinical to commercial as efficiently as possible. With the IRA’s nine-year price negotiation window looming, every month saved matters. Continuous, integrated systems can help compress timelines, and that’s a major draw.

Second, U.S. manufacturing. There’s rising interest in keeping production domestic, but many companies quickly realize that cost competitiveness remains a challenge, unless we adopt new technologies, such as continuous manufacturing, which is precisely why outsourcing to China and elsewhere persists. In addition to cost, one way that advanced manufacturing can shift that balance is sustainability. Boards are under pressure to deliver greener solutions, and continuous manufacturing, with its smaller footprint and reduced waste, aligns with those mandates.

Third, we are seeing a surprising shift in ownership models. Early on, when sponsors engaged us, they encouraged us to work with CDMOs to de-risk the technology and deliver product for them. But once we demonstrated the advantages — cost efficiency, sustainability, and reduced footprint — several innovators reversed course. Instead of outsourcing, they chose to internalize the process to maintain tighter control.

That raises two provocative questions for the industry: Will new technologies drive more innovators to bring manufacturing back in-house? For CDMOs, how quickly can you adapt and deploy these systems to prevent losing that work to internal teams? We’ve already seen it happening in some of our projects, and I suspect it may become a broader trend.

AM: We offer both large molecule and small molecule capabilities, and peptides sit right at that interface. What we’re seeing is twofold. First, a surge in demand for standalone purification, particularly because of GLP-1 programs. That’s become a significant requirement. Second, there’s a growing push for better manufacturing methods. Peptides have been made largely the same way for decades: laborious, solvent-intensive, and environmentally unfriendly. You discard a huge proportion of protective groups, and that inefficiency is no longer acceptable. People are now asking whether there’s a fundamentally better way to make peptides.

SM: We’ve been approached by companies asking whether continuous processing could be applied to peptide synthesis, precisely to address those inefficiencies. Eliminating the massive solvent usage would be a game-changer. Beyond that, we’re beginning to see more peptide-like small molecules designed for OSD. If that becomes a real trend, the industry will need to be ready to build very large quantities quickly and reliably, which isn’t the traditional playbook for peptides.

DH: To add another wrinkle, I was reading this morning that the oral GLP-1s in development are expected to be priced the same as sterile versions. If that holds true, it could have major implications for how demand and capacity shake out across drug substance and drug product.

AS: Over the past couple of years, funding issues have hit early-phase clients far harder than commercial ones. In biologics, that’s meant smaller tanks and smaller batches are seeing price pressure, while the big tanks are holding steady. In cell and gene therapy, feasibility studies and non-GMP work dominate. Is there an equivalent trend in APIs? Are smaller batches losing pricing power the same way?

AM: It’s an interesting contrast. On the API side, the dynamics aren’t identical. Ultimately, we’re all downstream of healthcare budgets, and those budgets are under extraordinary pressure. That pressure inevitably flows back to us, shaping where pricing can hold and where it can’t.

From our perspective, the differentiator isn’t so much about tank size as it is about what you do in the tank. Specialized chemistry is where you can maintain or even increase pricing, because the capability itself is scarce. For example, our microbial fermentation capability can command strong pricing at large scale. But at smaller scales — where more players have capacity — competition is fierce, and pricing gets squeezed. It’s almost the reverse of what you described in biologics.

If you zoom out, the scale of the molecules themselves is trending smaller. The blockbuster era of 30–50 ton per year APIs, or hundreds of tons for something like naproxen, is over. The market is moving toward smaller-volume, higher-value products. That suits us well, but it underscores how much the economics have shifted from the days of bulk commodity APIs.

AM: Flexibility is key. Sponsors want to come in and out when it suits them. At BIOVECTRA we can handle everything from plasmid to mRNA, lipid nanoparticle formulation, and fill/finish. Initially, the “A-to-Z” approach was very appealing, but as the market shifted, companies started asking for modularity instead. They want the option to do fill/finish with us but source their mRNA elsewhere or just tap one part of the chain. That willingness to unbundle services is much stronger now.

DH: I’ve seen the same thing. It used to be common to secure “take-or-pay” agreements, which gave suppliers a lot of protection. Since COVID, even with unusual assets, those contracts have eroded — maybe you can get a year guaranteed, but then it steps down. Sponsors want far more flexibility, and they’re not willing to lock in long commitments. I think it reflects the uncertainty of the times: companies don’t want to plan too far ahead because they’ve been burned before. And the same trend shows up in CapEx.

AM: Before COVID, sponsors would put up large CapEx to lock in capacity. Now, the expectation is that we fund it. That shift has been dramatic.

GH: It comes down to leverage, which swings back and forth. During COVID, it was a CMO’s market — capacity was constrained, sponsors would send out 10 RFPs and only get responses for half. That gave CDMOs more leverage with regards to take-or-pay terms, CapEx commitments, and even price increases. Now the pendulum has swung back. I’ve seen cases where sponsors send 10 RFPs and get 10 full proposals. That competition gives pharma companies the upper hand again. And interestingly, larger CDMOs that wouldn’t touch smaller clients before are chasing their business now. It’s making life much harder for smaller CDMOs, who are now competing directly with the big players for fewer funded projects.

DS: For biotechs, our focus has always been on exit clauses. We need the ability to walk away quickly if a partnership isn’t working. Internally, we’ve become much more disciplined about our go/no-go criteria, because we can’t afford missteps. What’s also striking is that investors now scrutinize the “green credentials” of CDMOs far more than they did even five years ago — back then, it wasn’t even a checkbox on a term sheet. For us, CMC has always been critical, but investors tend to focus on cost over output, so we’re pushing CDMOs harder to demonstrate both delivery and sustainability.

SM: I call CapEx the “activation energy” for advanced manufacturing. Everyone recognizes the operational benefits — reduced costs, faster timelines, sustainability — but you have to build first, and that’s where many projects stall. As Andrew noted earlier, sponsors have shifted CapEx responsibility to CDMOs. For new technologies like ours, that means we’re asked to front the investment, which then forces us to charge higher prices back to innovators, making the business case even harder. Sometimes that dynamic pushes companies to bring programs in-house rather than outsource. The topic of CapEx is even more critical for the application of advanced manufacturing to generics that are in short supply. The only real solutions I see there are creative financing: public–private partnerships, government support, vouchers that let manufacturers recoup CapEx faster. Regulatory uncertainty is no longer the main barrier; the financials are.

DH: One way we’ve tried to tackle it is on the working capital side. Sponsors want safety stock of raw materials, especially in today’s fragile supply chains. We’ll cover a month or two, but we push them to carry nine or 10 months. It’s not CapEx per se, but it relieves the pressure. Without that balance, small CDMOs can get swallowed by the cost of components like resins.

AM: Resins are a good example — they’re very expensive. Many sponsors are willing to finance extra resins because a failure without them could halt production completely. On top of that, sponsors increasingly ask CDMOs to put skin in the game. They won’t fund CapEx entirely. We’re working toward models where investment isn’t just process-specific — say, one exotic piece of equipment — but shared infrastructure, backed by take-or-pay minimums or hybrid agreements.

DH: Supply timelines are still a factor. During COVID, resins could take 12–18 months to secure. Now it’s closer to 9–12, which is better but far from ideal.

DH: Definitely. Some sponsors don’t want to commit to take-or-pay but then ask for a right of first refusal after putting in effort for tech transfer. Our response is usually, “You can’t have it both ways.”

GH: In my experience, it depends. If the CapEx investment is broadly useful, both sides will share it, and the CMO guarantees a percentage of capacity for that client. But if it’s a one-off piece of exotic equipment, it can be hard for the CDMO to absorb the cost. A right of first refusal makes sense only if the innovator is also participating in CapEx. Otherwise, it’s an imbalance.

SM: When a CDMO is asked to put CapEx down for new technologies, having rights of first refusal on second or third programs is almost essential. No one will fund a one-product play unless the product is a runaway success. Innovators are starting to expect those rights as part of ensuring capacity utilization.

GH: To be fair, I have seen pharma companies that flatly refuse CapEx still get creative elsewhere in contracts to make the economics work. But there’s a limit to how much a smaller CDMO can absorb if a sponsor won’t share the investment burden.

AM: Honestly, the Biosecure Act feels more like a headline than a reality. A year ago, everyone was talking about it, saying they’d bring products back onshore. We answered dozens of RFPs tied to it, but not a single one materialized. Tariffs, on the other hand, cause headaches, especially because they’re so fluid. One day they’re off, the next they’re on again. That lack of continuity makes it hard to plan.

MC: Andrew, do you think all these U.S. investment announcements — hundreds of millions for new capacity every week — are driven by tariffs? If so, what does that mean for CDMOs? Because let’s be honest: very few CDMOs can drop $400 million on new facilities. If big pharma is the one building, that’s bound to shift the outsourcing dynamic.

AM: Nearly every one of those announcements is coming from big pharma, not CDMOs. Often, they’re just dollar figures without any detail on what’s being built or where. To us, it looks more like political appeasement than genuine capacity expansion. Meanwhile, it’s pushing acquisition prices in the U.S. beyond reach to multiples we simply can’t justify.

TJH: I agree. Take Lilly’s Indiana investment. It’s hard to say if tariffs drove it, but they certainly tied it to appeasement. Fundamentally, though, it was about control. They don’t want to queue for CDMO slots or risk delays, so they build their own. That kind of thinking leads to overcapacity, and eventually all of us — innovators and service providers — will feel the consequences.

DS: From the UK perspective, we looked hard at the Biosecure Act when structuring sublicensing deals, but we ultimately waved it off. Talking to pharma partners, none said it would stop them from licensing; they’d just move production if needed. Our processes are highly tech-transferable, so comparability isn’t a big risk. And frankly, we still manufacture some of our ADCs in China today, drug product and even our third candidate in line. For us, decisions come down to capacity, expertise, and cost, because that’s what drives capital raising.

SM: And that’s the crux of it. If these U.S. investments are real, then we need a new model to make them viable. There’s a reason outsourcing went to China and India in the first place — cost. Either we absorb those costs here and watch drug prices skyrocket, or we pair localization with innovation to keep it competitive. Without that, reshoring just doesn’t add up.

AM: If you want true reshoring, follow the Irish model. Government tax breaks and direct funding have been fabulously successful for Ireland over the years, much more so, I’d say, than what we’ve seen in the UK. If you give companies a tax holiday plus financial support, you don’t just build capacity, you build a sustainable industry. Tariffs are only a short-term lever. They don’t solve the cost gap. Down the line, maybe with pharma companies adding so much of their own capacity, there’ll be buying opportunities for CDMOs. There are far better ways to build competitiveness than blanket tariffs. Tariffs might jolt the system, but real growth comes from structured incentives and long-term support.

GH: David, you asked earlier what keeps us up at night. For me, it’s not the tariffs — they’re unpredictable, yes, but they come and go. The bigger concerns are funding. First, the NIH cuts. That will absolutely impact U.S. innovation, which is what fuels new biotech launches and CDMO work downstream. Second, VC funding patterns. We’re seeing more money concentrated into fewer assets. A handful of molecules may get bigger checks than they would have five years ago, but overall fewer companies and programs are getting funded. I’ve seen stats that 40% of biotech companies have 12 months or less of cash on hand; that’s a real red flag. And third, competition from China, not just on CDMO services but on innovation itself. China is on track to surpass the U.S. in new product development, and big pharma is already in-licensing assets from there because the deals are better.

For me, the real challenge is ensuring the U.S. doesn’t lose focus on innovation. Without funding, both government and venture, the whole ecosystem risks being hollowed out.

SM: For me, two stand out. First is continuous manufacturing, but not just continuous chemistry at a single step. We’ve been able to run a single chemistry step continuously for 20 years. The real game changer is process integration. When you integrate across the supply chain — raw materials all the way to finished product — that’s when you get speed, better quality, and lower costs. We’re now starting to see large pharma take this seriously, and I think that integrated continuous manufacturing will become truly transformative.

The second is AI. We’re not there yet, but it will be critical. Continuous manufacturing and advanced analytics generate massive data streams. AI can help us analyze that in real time, adjust the process while it’s running, and even predict product outcomes. To make that work, we also need better sensors and in-line analytics that can provide second-by-second visibility into the process. Current PAT tools are good, but they could evolve much further. Together, integrated continuous manufacturing, AI, and real-time analytics have the potential to reshape how pharmaceutical manufacturing is done.

DS: From the discovery side, though, I have a more tempered view of AI. I’ve seen a lot of companies use it as a buzzword to tout platforms that can identify two targets, for example, but not necessarily the right two targets. That’s a fundamental distinction. In our own work, we’re still grappling with whether AI can really help us with the complexity of ADC construct design. I put this in the hands of a younger team — people I thought would naturally have a deeper fluency with AI — but even they keep running into the same roadblocks. The problem is the data. With three programs in the clinic, four more on the way, and another 10 in early development, we still don’t have the sheer volume of data needed to get meaningful answers to the real question I care about: where am I going wrong? Without access to other companies’ raw data, the algorithms can’t learn enough to give us those insights. For now, I find myself relying more heavily on the accumulated expertise of colleagues who have been working on ADCs for decades. I can see the value of AI in manufacturing, where the data sets are larger and more structured, but in discovery it hasn’t yet delivered what I’d hoped.

AM: I’d add additional caution from the CDMO perspective. We’ve had clients explicitly tell us they’d want to know if we were using AI in their manufacturing process, because of the concern that their proprietary data could somehow become part of a larger global data set. That’s not something the industry has really worked through yet: how to balance the potential power of AI with the obligations we have to protect client information. As attractive as AI looks from a technical standpoint, we need to be very careful about transparency and client trust before it becomes a standard part of CDMO operations.

GH: From my perspective, I tend to think of companies using continuous manufacturing mainly to bring costs down or sometimes applying it as a tool for a single step of chemistry, especially in early development or discovery. Sal, you said you’re increasingly seeing companies come to you for speed, which surprised me. In what phase of development are you finding that? Because from the CDMO side, I usually see clients reluctant to change processes once a candidate is selected, precisely because of speed concerns.

SM: We’re seeing that the demand for speed really emerges in the clinical manufacturing phases — moving from phase I into II and especially III. By the time a program gets to phase III, you need to think about launch, and the traditional process often involves batch-to-batch variability, multiple tech transfers, and significant delays. What companies are asking us is: Can we use one integrated system that runs continuously through phase III and into commercial launch? That continuity eliminates handoffs and accelerates time to market.

I agree that continuous may not have much impact in phase I, when you might only need a kilo or less of material. At that stage, it’s often a hybrid approach — some reactions in flow, maybe tablets via extrusion, with the rest still in batch. But if you don’t start introducing the continuous mindset early, you can’t suddenly flip a switch in phase III. The sweet spot, in my view, is onboarding at Phase I with a hybrid system and walking the program forward all the way to launch.

GH: At a conference last year, I noticed a lot of API manufacturers promoting flow chemistry or continuous capabilities. But when I spoke to them, it seemed they only had one or two processes they could run that way, and they weren’t doing it regularly. Often, even in phase I or II, customers were hesitant to switch, worrying that changing from batch to flow chemistry would slow them down. At the same time, I’ve seen some Chinese CDMOs introducing these technologies at the discovery and preclinical stages. Once it’s embedded that early, pharma doesn’t want to move back to batch.

SM: The issue is that people still tend to equate “continuous” with “flow chemistry, “and by default, with simple single-phase plug-flow reactors. If that’s your mindset, the applications are narrow. Real continuous manufacturing is much broader. It includes cascade CSTRs, the ability to handle solids, multiple reactions in sequence, and integration all the way downstream. If we can’t handle solids in flow or show how to transition from batch into an integrated system, then we’re not truly changing the paradigm. The goal is to demonstrate that broader capability so that companies don’t just think about one reaction in flow but about a fully integrated, scalable system that fundamentally redefines how you manufacture.

SM: From my perspective, innovation will drive the next phase. We’re moving away from traditional batch processes and toward more advanced approaches: continuous manufacturing, 3D printing, and others. Big pharma will lead the way, because they have the capital and the pipeline to initiate this transition. Once they move, CDMOs will need to adapt to support those products, and eventually generics will follow. That progression — pharma first, then CDMOs, then generics — is both my wish list and what I think is most likely to happen.

DS: For me, the key change will be in ADCs. I expect the overall number of ADCs in clinical development to decrease significantly. Drug resistance is already limiting some of the established payload classes, and once you hit resistance, the program stops. Valuations of ADC companies won’t fall; in fact, they may rise as investors chase novel payloads, but the sheer volume of programs will decline. That means CDMOs need to think carefully about where to invest. Building yet another conjugation facility may not make sense; the real need is for drug product capabilities that can handle complex ADCs reliably.

GH: I think that pricing pressures may actually work in favor of small molecules. With talk of price controls and reimbursement constraints, small molecules remain the most cost-effective modality to develop and manufacture. That ensures they’ll always have a strong place in the mix. One area that hasn’t been discussed much here is the Inflation Reduction Act and its so-called “pill penalty.” If that gets equalized, it could create an even more favorable environment for small molecules.

AM: Small molecules aren’t going away. They’re cost-effective and evolving in interesting ways, like protein degraders, which I think have a long runway. We’ll also see more “in-between” classes, like peptide-like small molecules, that don’t fit neatly in the traditional categories. At the same time, biologics continue to make big strides, especially monoclonal antibodies, where manufacturing capacity has expanded significantly. The balance might shift slightly toward biologics in the future, but small molecules will remain essential. What concerns me most, though, is China. We’re already seeing pharma companies license assets from China that stay manufactured there. If you look at what China achieved with electric cars, I don’t see why they couldn’t do the same in pharma. That possibility keeps me up at night.

MC: On the simpler formulations and molecules, Chinese players — WuXi in particular — are winning on price, especially in early development. For more complex molecules, where specialized expertise is required, Western CDMOs still compete strongly. But on the straightforward projects, we’re seeing a lot of business lost to China.

TJH: To end on a more positive note, what excites me most is collaboration. Our growth recently has come from partnering with other CDMOs, whether that’s bringing proprietary solubility technologies from Helsinki into the U.S. market or working with ADC conjugation specialists under shared-CapEx models. These collaborations allow us to deliver better value for clients and enter new markets with less risk. The industry feels smaller and more interconnected every year, with reputations, relationships, and trust playing a bigger role. That willingness to leverage partnerships for mutual success gives me optimism about where we’re headed.

This panel is one of several expert discussions informing Nice Insight’s 2026 State of the Industry report — download the full report to see how these trends compare across all major therapeutic modalities.