M & A :
A shifting landscape
Recent events are making pharmaceutical manufacturing a hot area for investors . We report from some recent online events by CPhI
M
& A in the pharmaceutical industry is clearly a hot topic right now , not least in the CDMO sector . Ahead of its events in North America and Europe , CPhI recently organised a roundtable webinar on ‘ How M & A is shifting the pharma landscape ’ and a podcast on ‘ M & A Strategies in the CDMO sector ’. M & A is one of the key factors shaping the industry , said webinar moderator Fintan Walton , who is the CEO of PharmaVentures , a major M & A advisory firm specialised in the healthcare field . The forms it takes are as diverse as the industry itself . Some Big Pharma firms , like Boehringer Ingelheim and Pfizer ,
Walton – More CDMOs will merge with CROs have long been CMOs as well . The divestment of sites from Big Pharma to CDMOs , such as Novartis ’ s two sites in Spain to Siegfried continues ; CDMOs are still buying other CDMOs ; and traditional service providers , like Thermo Fisher , have got into manufacturing . Walton for one believes that there will be an increase in mergers between CDMOs and CROs , which will create even larger diverse cross-services corporations . In the podcast , Kevin Bottomley , partner at Results Healthcare , another M & A advisory firm , quoted figures projecting M & A in the pharmaceutical industry to reach nearly $ 158 billion by 2025 at CAGR of 6.5 %. This , he said , has been driven by many factors , including access to pipelines and new technologies , as well as the ever-increasing appetite for outsourcing manufacturing among ( bio ) pharmaceutical companies . Manufacturing , Bottomley continued , is “ an incredibly attractive market for investors ” for this reason and others . Populations are growing and ageing , so they need more medicines ; and there are partly politically driven moves to repatriating manufacturing , partly in response to the COVID-19 pandemic . All this translates into a CAGR ahead of GDP growth for the CDMO sector , he said . Results Healthcare has noted the rise of specialist investors focused on the CDMO sector . Recipharm is a prime example of a publicly listed CDMO being taken private , by EQT . These investors are also driving M & A ; once they have completed an acquisition , they tend to ask what they can do next to add to it , be it via new capacity or new capabilities . “ Everyone likes gravitating to and thinking about the ‘ sexy ’ new technologies like RNA and gene therapy ,” said William Marth , managing partner at North Ocean Ventures , another webinar panellist . “ But fundamentally , what is being demanded everywhere is still mainly generic , small molecule therapies , and these are very important in the CDMO space .” All agreed that these volumes will only increase in time , though , noted Andreas Raabe , managing partner of Adragos Pharma , the manufacture of these products must become much more productive . That raises the longer-term question of whether CDMOs can or will invest in the necessary technology , or partner with pharma companies – and thus what they focus on . Walton noted that , since the pharmaceutical industry is high risk , pharma companies require a high degree of flexibility . They
16 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981