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CPhI Report Highlights Anticipated CDMO Market Trends

10.17.17

Niche services and technologies to dominate future acquisitions, increase in flow chemistry, fermentation anticipated

CPhI Worldwide, which will take place in Frankfurt, October 24-26, has released findings of part I of the 5th edition of the CPhI Annual Report, which focuses on the immediate and long-term trends in pharmaceutical outsourcing. This first part of the report features the contributions from: Gil Roth President, PBOA; Vivek Sharma, CEO at Piramal Pharma Solutions; BSV Prasad, Senior Vice President & Head, Small Molecules Business, Biocon; and Sam Tadayon, Executive Director & Dr. Minzhang Chen, CEO at STA Pharmaceutical.

The report shows a trend towards continued integration of pharmaceutical outsourcing, with single source development providers increasingly sought. Also, according to the report, acquisitions in the future will not be dominated by large mergers, but rather smaller niche services and technologies to fill specific asset gaps. Furthermore, the industry is anticipating a large increase in the use of flow chemistry and fermentation technologies but resistance to change may slow adoption. Also, the longer-term implications of drug pricing, and big pharma income repartitions are highlighted as the key unknowns and risks for CDMO sector.

Gil Roth, president of the Pharma and Biopharma Outsourcing Association, suggests that the consolidation expected of the CMO/CDMO sector to improve the efficiency of outsourcing has not yet panned out in 2017 [this was written prior to Catalent's purchase of Cook Pharmica]. The only large merger with the intention of creating a more integrated outsourcing model was the Lonza acquisition of Capsugel. However, Mr. Roth predicts that smaller scale acquisitions to expand current capabilities are far more likely by CDMOs, while CDMOs outside the U.S. may try to expand U.S. presence by acquiring an existing provider or an available pharma facility.

Mr. Sharma at Piramal forecasts that the one-stop-shop CDMO is now coming to fruition in the industry, with biotechs a clear beneficiary of this trend. He agrees that over the next few years we will see ‘CDMOs in niche areas forward and back integrate’, offering more integrated value chains to customers by simplifying the supply chain and reducing risk. 

Mr. Tadayon and Dr. Chen at STA Pharmaceutical, state that flow chemistry has the potential to revolutionize and modernize pharmaceutical processes, but cautions that overall, the industry is still a full 50-years behind the bulk chemicals industry on the implementation of this technology. They note that implementing changes at the commercial stage can be limited by regulatory challenges. However, those companies that invest early in this technology will benefit from more environmentally friendly production, and cost savings at commercial scale. To expedite the process and advance the technology more quickly, an increased number of specialized chemical engineering teams will be needed. Initial development of flow chemistry production occurred at big pharma facilities, but increasingly, we will see these outsourced to strategic CDMO partners.

The report also pointed out the increased role of fermentation in bringing newer types of drugs through the development pipeline. Mr. Prasad of Biocon highlighted the role it will have in helping to commercialize new vaccines, biologics and even problematic areas like the creation of new antibiotics that overcome antimicrobial resistance. In particular, the technology holds the key to fully leveraging the advances in recombinant DNA and will be beneficial to drug discovery programs involving stem cells and even gene therapy vectors. The resurgence of interest in antibiotic development and therapeutic vaccines is also forecast to drive increased demand over the medium term.