CONTRACT & TOLL MANUFACTURING
As buyers place greater emphasis on GMP and FDA requirements, manufacturers with the ability to produce to regulated standards are gaining ground, SOCMA explains.“ Demand for those capabilities is rising, yet the number of facilities operating under such oversight remains limited, creating both a bottleneck and a market opportunity.
“ Firms that invest in risk-based, science-driven systems differentiate themselves by accelerating commercialisation, reducing risk, and building credibility with customers,” the report continues.“ In a market defined by quality and reliability, regulatory readiness has become more than a compliance exercise; it is a strategic advantage that shapes sourcing decisions, partner selection and longterm growth potential.”
Citing this report, Ross Gale, vice president and director of acquisitions at International Process Plants( IPP) notes that“ regionalisation is the theme, not necessarily near-shoring. There is a desire from the market to regionalise production, which means supply chains across North America – including Canada and Mexico – as well as the UK and Western Europe.”
Gale adds that the support for documented good manufacturing processes is supporting buyers in North America and Europe pulling back from suppliers in China and India in favour of suppliers on either side of the Atlantic. All that said,“ the money to accomplish all that has not been forthcoming. The gap between the idea of regionalisation and the reality is a big red flag.”
Need for capacity & capability
A need for capacity and capability is part of the problem, Gale explains.“ I was just at CPHI in Frankfurt and there was a lot of conversation about regionalisation, but there was the concern that sufficient API capacity in the US just does not exist.”
Across three years of survey data, SOCMA has found that the mix of chemistries shifted dramatically, with
Gale- Regionalisation rather than near-shoring is the trend
legacy processes giving way to more specialised, value-added reactions. Polymerisation, once the dominant process at nearly 60 % in 2024, has fallen to just above 30 % in 2026. By contrast, esterification has surged to more than 50 %, making it the most utilised chemistry, and ethoxylation has nearly doubled in demand.
“ Those movements highlight the industry’ s pivot toward performancedriven and application-focused chemistries,” says the SOCMA report.“ At the same time, processes such as hydrogenation remain widely used but at a lower level than in previous years, while sulfonation and quaternisation are gaining traction, reflecting diversification across manufacturing capabilities. Unit operations like distillation continue to serve as a universal backbone across the sector, reinforcing continuity even as specialisation grows.”
That could be specific chemistry, such as ethoxylation, or it could be a process such as spray drying. It could also be a class of chemicals. At the last SOCMA Show there was an entire presentation about how the US Department of Defense needed more domestic and allied suppliers of reaction chemicals, propellants and explosives.
Emslander- Strategic fit, sustainability and digital enablement will drive M & A
Operators and investors alike are well aware of the need for capacity or capability in the US for specific chemistries or processes, Gale reiterates.“ A lot of companies have plans on hold, either an expansion project or an acquisition, they are holding on final investment decisions. There are lots of deals and projects that have the feasibility done, the designs, specifications and due diligence. They are just holding for the green light.”
Within IPP’ s book of business Gale notes the ratio of equipment and plants available to deals done has never been greater than in Q4 2025. In the last year or so, the firm added new vessels and equipment to its inventory in collaboration with fabricators who needed certainty in their own order book.
“ There is a lot of interest in GMP facilities and life sciences,” said Gale.“ The value proposition for a whole plant is compelling.” Noting the hesitancy for some operators and investors to commit capital to growth in a time of uncertainty, he added,“ buying an existing facility can really help de-risk that capital investment.” ●
26 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981