PHARMACEUTICALS
with prescribers and government institutions . Others noted that Big Pharma is not actually doing much of the science and discovery either , since so much of the innovation is coming from biotechs and emerging companies . For Marth , this simply reinforces the point . “ It is clear that [ letting manufacturing go to CDMOs ] is the best utilisation of capital for pharma ,” he said . Moreover , as Big Pharma purchases so many of the innovative small companies and / or their technologies , CDMOs become part of their supply chain . Bottomley was more sceptical about consolidation . “ Frankly , people have been saying this for the last 20 years and it doesn ’ t seem to happen ,” he said . Why ? “ Fundamentally , the technologies are completely different . An API company is not at all the same as a secondary manufacturing company . This degree of specialisation makes it very difficult to bring these companies together in a single , large , all-providing CDMO .” That said , he expects investors to attempt it and there is a lot of scope to do it , but it will be difficult to achieve . The other block is that , although conceptually , pharma companies
COVID-19 has helped to make the whole healthcare industry a target for investors
Bottomley – Consolidation far from certain
want fewer suppliers , once they put business into a CDMO , it will generally be locked into that CDMO for a long time . With CROs conducting clinical trials , it is much easier to move the next trial to someone else . “ One of the concerns we ’ ve seen from pharma is that they don ’ t want the CDMOs to become too powerful and be able to dictate terms in terms of pricing , etc . So in reality they are more ready to have multiple suppliers than they admit ,” Bottomley added . That is certainly an issue , Raabe told Walton . “ One strategy would be for pharma companies to be involved or invested in CDMOs , so that they also benefit from the profits of the
CDMO .” This could mean taking an equity position or using their capacity to produce for third parties , he suggested , to some disagreement among those who think that if Big Pharma has spare capacity to market , it has not done its primary job properly . Results Healthcare has examined the concept of the vertically integrated CDMO . “ It looks superficially attractive but you have to remember that CDMOs who do API manufacturing and those who do secondary manufacturing are almost completely different types of business ,” said Bottomley . The idea of a ‘ one-stop shop ’ for API and the pills may be an attractive concept to a biotech , but large pharma companies still generally prefer to go to specialists for the two things – and perhaps to yet another for the packaging . For reasons like this , at the moment API companies are mainly buying other API companies and / or capabilities . Secondary manufacturers are doing likewise . There are examples of crossover but not as many as there were ten years ago , Bottomley noted . It mainly happens when companies reach the point where simply being one or the other is no longer enough to drive growth . Thermo Fisher , again , is a prime example here : not traditionally an API manufacturer , it has been buying assets from Roche and GSK , as well as acquiring Patheon and other capabilities . COVID-19 has also made the healthcare industry , pharma included , more enticing to investors – not least because of the way companies and their academic collaborators worked together to bring vaccines to the market at unprecedented speed . It has shown how innovation in the life sciences can work to the benefit of society . Governments increasingly see the value of putting more money into healthcare – and investors are following . There will be challenges along the way , of course , but for the next few years , said Bottomley , “ healthcare and the life sciences are going to benefit from the catastrophe that was COVID-19 ”. •
18 ESTABLISHED 1981