Making the Right Capacity Decisions at the Biomanufacturing Crossroads

While biomanufacturing has ample capacity, a funding downturn and workforce shortages have created a paradoxical situation, putting pressure on sponsors’ decisions when it comes to choosing their manufacturing partners.

Growth in the biopharmaceutical sector is leading to increased need for relevant biomanufacturing capacity and workforces with the required skillset to perform the necessary operations. “Biomanufacturing capacity is a multifaceted issue contingent on economic, technological, infrastructure, and workforce factors,” explains Steve Lavezoli, VP, Curia Biologics at Curia Global. “While capacity shortages caused by the pandemic are no longer an issue, we are now seeing capacity shortages tied to lack of funding and available workforce.”

Funding Downturn

“Since late 2022, the biotech sector has experienced a prolonged funding downturn, with venture investment, IPO [initial public offering] activity, and private placements all falling well below historic highs,” confirms Magdalena Leszczyniecka, CEO of STC Biologics. “As of mid-2025, a substantial number of early-stage biotechs are operating with dwindling cash reserves, leading to widespread pipeline de-prioritization, suspended manufacturing campaigns, and even full program shutdowns. This has created a ripple effect throughout the CDMO sector, especially among those heavily exposed to pre-commercial clients.”

As a result of this financially difficult landscape, there is significant underutilization of capacity in the CDMO space, Leszczyniecka continues. “Industry estimates suggest that 15–25% of mammalian bioreactor capacity remains idle across multiple facilities in North America and Europe. This imbalance between available capacity and actual demand is particularly acute for mid-size and newer CDMOs that scaled up aggressively during the pandemic and early post-pandemic years, expecting sustained demand from both mRNA [messenger RNA] and protein-based therapeutic programs,” she says.

Industry has already started seeing the consequences of these issues, Leszczyniecka stresses. “A large, high-profile U.S.-based CDMO backed by significant investment (including government), has reportedly begun closing or divesting sites after failing to secure enough long-term contracts to sustain its operating costs,” she remarks.

Other CDMOs are feeling the effects too, with news of downsizing efforts, selling assets, or moving away from good manufacturing practice (GMP) manufacturing and adjusting to other avenues to stay afloat, Leszczyniecka asserts. “Even larger players are now reevaluating their capital expenditure plans, delaying expansion timelines, or reducing workforce in specific locations,” she says.

Lavezoli confirms that due to recent economic factors, CDMOs have been shuttering facilities and dropping pre-clinical and clinical service offerings, which reduces available capacity, particularly for start-ups developing new drug candidates. “These companies are the hardest hit because they have limited funding and need pilot and early clinical manufacturing options the most, creating a capacity bottleneck.  Due to the shortage in capacity in the United States, companies often end up relying on the lower cost services they can obtain from Chinese and Indian CDMOs,” he states.

“However, companies with grant funding requirements or contracts with the United States government often need capacity with U.S.-based CDMOs,” Lavezoli emphasizes. “Non-U.S. CDMOs also pose some risk to programs if a company will need to technology transfer processes in the future, for example, to move from clinical development to commercial manufacture. There are often differences in transparency, processes, and regulatory requirements in China and India versus the United States.”

Additionally, causing further disruption to traditional outsourcing strategies is the enforcement of the Biosecure Act in the U.S., notes Leszczyniecka. “While this has created opportunities for U.S. and European CDMOs, it has also introduced uncertainty and friction in project transfers and technology access, particularly for smaller biotech companies who must now switch vendors midstream under new federal compliance rules,” she warns.

An Interesting Paradox

“The biomanufacturing landscape presents an interesting paradox: while the industry has seen excess capacity overall (evidenced by facility sales and closures) demand for high-quality gene therapy solutions remains robust,” confirms Scott Broughton, CCO, Ascend. “This [demand] creates opportunities for strategic companies willing to think differently about capacity expansion.”

By way of example, Broughton highlights the strategic acquisition approach, where a company purchases an existing facility with the expert team and then invests in upgrading those assets. “This retrofit strategy is not only viable but often superior: facility upgrades ensure enhanced safety and quality standards while ultimately lowering costs and improving delivery timelines,” he adds.

“Retrofitting may be an option for some cases, but not for other cases,” stresses Hanns-Christian Mahler, CEO, ten23 health. “For example, where facilities employ the more outdated ‘RABS’ [restricted access barrier systems] technology as the environment for sterile filling, an upgrade to an Isolator in Class C may not be possible without taking down a line completely for very extended periods. And, where syringe filling in RTU [ready-to-use] containers is required, a bulk vial line cannot be retrofitted.”

It is not always advantageous for companies to build new facilities or retrofit their existing facilities to gain the required capacity, Lavezoli points out. “Doing so requires a heavy investment and there is always the possibility that drug candidates will not make it past the clinical stage. The losses due to a failed drug candidate increase immensely if tied to an investment in retrofitting,” he says. “Rather, companies should look to CDMOs with an international footprint, and/or with the capabilities to run a project from inception through commercial manufacture to help offset some of these ongoing issues.”

For Vinay Saluja, Global Head Development Services, Novartis Contract Manufacturing, while retrofitting can offer some companies a potential solution, it is not without its challenges. “Companies must also explore alternative avenues to enhance capacity. Among these options are investing in scalable and flexible production systems that can adapt to varying demands, thus avoiding the pitfalls of over- or under-production,” Saluja states.

Benefits of Flexibility

Biomanufacturing capacity is certainly not lacking in industry right now, stresses Minni Aswath, VP of Process Development, Bionova. “However, the issue is finding the right kind of capacity. Doing so by looking for the right outsourcing partner makes a lot of sense right now,” she says.

Providing maximum flexibility for innovators and sponsor companies is critical for CDMOs, Aswath highlights. Being able to adjust scale and unit operations easily using a ballroom suite, for example, is beneficial for customers, she adds.

“Modern single-use facilities with no fixed equipment, such as multi-modal biopharmaceutical manufacturing sites, allow for a modular approach that can be updated,” says Kenneth Holbourn, Senior Director of Technical Project Lead Group (PD), FUJIFILM Biotechnologies. “The use of predominantly single-use systems allows easy updates to match modern technologies and negates the requirement for capital investments.”

Currently, there are biomanufacturing facilities that range in age from brand new to approximately 40 years old, comments Alison Moore, Chief Technical Officer, Codexis. “Many companies with established plants or networks of plants continually invest capital to maintain or significantly change plants for the production of new assets,” she says. “Flexibility has increased with the use of ballroom-style suites in which modular and/or single use equipment can be easily switched out.”

However, this sort of flexibility is not commonly found in the production infrastructure for chemical synthesis, which usually comprise large, fixed, stainless steel equipment, Moore notes. “For siRNA [small interfering RNA] specifically, large scale production is limited both by the synthesis column size and by downstream chromatography scale, so large scale production requires capital-intensive infrastructure,” she adds.

At a Crossroads

“Strategic partnerships offer a powerful avenue for addressing capacity constraints,” Broughton says. Biotechs, academic facilities, and contract manufacturers can pool resources effectively, supporting each other's clients or even transferring facilities between organizations. Rather than capital-intensive buildouts, companies can leverage partners for specialized services like QC [quality control] testing, small-to-mid-size drug product manufacturing, and packaging.”

Taking such a collaborative approach, industry can experience growth through expanded expertise and fresh capabilities, rather than relying on capital investment, Broughton emphasizes.

“The clinical and commercial biologics manufacturing sector stands at a crossroads in 2025,” adds Leszczyniecka. Despite strong global footprints and technical capabilities, macroeconomic pressures and constrained capital markets have weakened demand from biotech sponsors and, in combination with legislative reshuffling and broadening competition, the CDMO market is consolidating, she specifies.

“The winners in this environment are likely to be lean, flexible providers with strong technical track records, robust regulatory histories, and the ability to serve late-stage and commercial products across geographies,” Leszczyniecka summarizes. “For sponsors, now more than ever, strategic selection of manufacturing partners is critical — not just for capabilities and timelines, but for resilience and financial stability.”

 Photo by Javier Allegue Barros on Unsplash