The biopharma manufacturing landscape is undergoing change, and so are contract development and manufacturing organizations (CDMOs). As the industry enters 2026, venture capital constraints will continue to pressure early-stage pipelines, reducing the volume of preclinical and early clinical programs that once fueled CDMO growth. Paired with evolving government regulations, from tariffs to legislation, the year ahead will reshape global manufacturing.

The industry itself is expanding as outsourced drug manufacturing continues to grow. Experts predict growth for the global CDMO market over the next 10 years, from its recent value of approximately $246 billion.

Market shifts are increasingly dictating decisions around investment and capacity, with a strategic split emerging in the industry. While some CDMOs are regionalizing and specializing, others are doing the opposite—aggressively expanding their service breadth to become integrated, ‘one-stop-shop’ partners. Here are three ways CDMOs will evolve their operations to adapt.

1. Greater reliance on quality to drive sales

Over the last 10 years, quality has been evolving from a reactive, compliance-centric business unit to a value driver for the enterprise. CDMOs have been focused on driving down the cost of poor quality, leading to reduced operating costs and greater throughput.

Despite these improved metrics, large biopharmas are still reconsidering outsourcing strategies. Many are investing heavily in their own internal manufacturing capabilities, driven in part by recent U.S. legislation and outsourcing challenges. The new reality is that CDMOs are currently competing with their customers’ internal manufacturing teams. 

This insourcing pivot is fueled partly by a desire for control. When a sponsor builds its own facility, it isn’t just buying capacity; it is buying total visibility into data and a guarantee that quality standards are met without the back-and-forth friction often associated with external partners.

In 2026, leading CDMOs will make moves to balance the insourcing trend. They will work to retire disconnected processes and systems, automating those back-and-forth tasks and offering levels of real-time transparency and data integrity that rival the sponsor’s own internal operations. These CDMOs will position their quality culture as a core part of the value proposition for sponsors.

 2. Success will be defined by the “CIO-CQO alliance”

As investment in early development products continues to shrink, manufacturers will align their capabilities more closely with specific sponsors, product lines, and modalities. We’ll see more CDMOs move away from broad early-stage R&D portfolios toward focused late-stage and complex commercial manufacturing work, such as cell and gene therapies and antibody-drug conjugates (ADCs). 

This will not be a cosmetic change. Producing treatments to patients at a commercial scale will require CDMOs to alter how they think about investment, capacity, and customer alignment. Digital enablement will be critical to continue delivering at the quality and scale the industry requires. How well the chief quality officer (CQO) and chief information officer (CIO) collaborate will determine success. Their agendas must be two sides of the same coin. To get there, the CQO must:

• Promote transparency: Shift from a “black box” approach to providing sponsors with controlled, real-time visibility into their specific batches.
• Accelerate speed to market: Build streamlined processes for rapid supplier onboarding and process performance qualification for new manufacturing methods.
• Move from firefighting to proactive action: Transition to using sensor data and trends to drive risk-based investigations before quality events occur.

For the CIO, shifting toward building a unified infrastructure can make a significant impact. CIOs can start by beginning to:

• Eliminate technical debt: Retire fragmented legacy systems that create “islands of data” and prevent global footprint visibility.
• Bridge the IT and operations divide: Connect data to ensure flow from the shop floor to enterprise solutions.
• Enable agentic AI: Build AI into the overall digital strategy and selectively deploy agents to handle resource-intense manual tasks, focusing teams on high-value operational work.

Together, the CQO and CIO can establish a culture of quality with infrastructure that can adapt to a changing market. 

3. Local strategy will become a quality attribute

The current global supply chains are under scrutiny for lack of efficiency, security, and compliance. Legislative efforts, such as the BIOSECURE Act (H.R. 8333), reflect growing regulatory emphasis on domestic biotechnology infrastructure and supply chain risk mitigation. The bill’s inclusion in national policy discussions signal a shift toward geographically constrained sourcing and manufacturing models.

CDMOs that have geographical advantages, like proximity to regulators or infrastructure to meet regional compliance frameworks, will gain a competitive differentiator. Where a CDMO operates will begin to matter more, and growth will depend on whether organizations expand into priority regions or double down on existing sites to meet stricter regulatory and sponsor expectations.

Sponsors will increasingly weigh regulatory alignment, supply security, and regional access when selecting partners. CDMOs will look to implement programs to further accelerate this shift, enabling earlier regulatory engagement with different facilities and strengthening onshoring and regional manufacturing strategies. Tariffs, security-focused regulations, and the desire for greater control over supply risk will push the local strategy forward.

Preparing for a more focused future

As the pressures on supply chain and manufacturing converge, CDMOs will find new opportunities to pursue. Organizations will make clear, sometimes difficult choices about which customers to support, which markets to commit to, and how much scale they can realistically sustain. The broad “we do everything” service model will work for some, but a new focus-centric CDMO service model will also emerge.

CDMOs will define clear specialization, geographic positioning, and operational discipline to consistently deliver in a more demanding environment. The CDMOs that proactively evolve will be better positioned to lead the industry into the future.

Bruce Keisler leads strategy at Veeva for the CDMO, generics, and pharma services sectors. With a background spanning life sciences consulting and internal operations, Bruce offers a perspective that balances forward-looking strategy with a deep understanding of practical execution.