PHARMACEUTICALS
Roth- FDA cuts could impact drug review timelines Chehab- Investors do not like uncertainty
Kane- Investors making molecule-specific decisions some larger CDMOs to give up on cell and gene therapy.
A similar pattern was previously seen in ADCs, where the market did not seem to be taking off. Now there seems to be an ADC announcement every five minutes.“ Companies on the CDMO space are looking at how best to serve that field and whether it makes sense to offer complete services or to excel in a particular field,” Roth said.
Managing risks
Amador said that Almirall is currently working with 20 to 30 CDMOs.“ Having a one-stop shop that covers every area is ideal, because it eases coordination, it’ s less risky and you can build a closer relationship with your partners. However, it’ s not that easy to find,” she observed. Sponsors need to be strong across the full range and sometimes it is necessary to find a CDMO with the right expertise in one area.
Looking at how the company’ s priorities for CDMOs have changed in the last few years, she added:“ Agility and reliability are the most critical things nowadays. Innovation is important but if a partner cannot deliver on time or communicate the issues they have, it causes us pain along the way.”
Almirall, she said, does not look for manufacturers in isolation, but for partners who understand the issues of commercial launch and are willing to share the pain in certain situations. Dual sourcing is one way to mitigate risk; another is true
partnership based on trust with a CDMO that can help anticipate issues and keeps dialogue going for when a problem inevitably arises. The company still has transactional relationships, Amador said, but for the critical parts, a close relationship, clear communication and being true partners are all essential.
Chehab agreed that having strategic partnerships with clients is a big value driver for a potential buyer. When investors look at CDMOs, quality is non-negotiable, but differentiating technologies and the ability to invest and grow alongside the sponsor are also very important. Investors are also keen to benchmark them against their competitors.
Kane noted that investors have also been making molecule-specific decisions in the last five years or so. They ask if the molecule is for a specific indication, if it will be a breakthrough therapy and if the CDMO has the expertise to take it through pivotal studies.
In the case of blockbusters in areas like diabetes and oncology, they will also ask if the CDMO has the capacity to take it through large-volume clinical trials.“ Buying decisions will also be based on volume forecasts and planning for success because sponsors do not want to change their outsourced partner,” he said.
Speculative expansion
Building on this, Roth observed that CDMOs also need to riskassess the molecules brought to them and understand how much they can expand for each potential project. There has been a tendency in the past for everyone to pile into a promising area only to find the volumes available are not quite what was expected.
This may yet be the case for GLP-1s as it was for prefilled syringes 15 to 20 years ago, despite all the forecasts of indefinite high growth.“ I think R & D will still drive this. There is still a large part of pharmaceutical outsourcing that is about lifecycle management and strategic decisions about what they don’ t want to invest in,” he said.
From a small and mid-tier perspective, many decisions are driven by investors’ access to capital, Roth continued. In the US, with the current pressure to invest at home, much may depend on“ whether outsourcing is going to be considered a domestic investment by this administration if a company with non-US operations is looking to outsource in the US”.
“ Part of my job is educating the Department of Commerce about how much manufacturing CDMOs are able to provide, without it being a $ 6 billion facility the way some larger pharma companies who are engaging with them do,” said Roth. Many clients are not able to build in the US but are ready to outsource to companies manufacturing there.
Amador added that Almirall is seeing more and more hybrid structures at the sponsor-CDMO intersection. This takes the forms of co-creation, co-investment and incentives to manufacture faster and /
16 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981