With a revival in biotech funding , a bulging pipeline and strong fundamentals , the pharma outlook is more positive than it has been of late . Andrew Warmington reports from CPHI Barcelona
2023 : The year of the upturn ?
With a revival in biotech funding , a bulging pipeline and strong fundamentals , the pharma outlook is more positive than it has been of late . Andrew Warmington reports from CPHI Barcelona
Speaking at the official CPHI Barcelona press conference on 24 October , Brian Scanlan of Edgewater Capital Partners and formerly CEO of part of what is now Alcami , said that the fundamentals for pharma in the next few years and for CDMOs in particular are excellent .
The number of small and large molecules in the pipeline has grown from 16,000 in 2019 to over 20,000 , which will drive growth in demand for services in the coming years . “ It may look as if there is overcapacity at CDMOs right now but there really isn ’ t ; CDMOs are building in parallel with what is happening in Big Pharma ,” he said .
The outsourced share of manufacturing has grown absolutely and relatively , Scanlan and others observed , because emerging and virtual companies do most of the innovation , now accounting for nearly 70 % of all pipeline compounds . They rarely manufacture , so demand for outsourced services is growing and extending into the early phases .
The downside is that almost all emerging companies rely on external financing to get through Phases I-II . When capital is in short supply , development slows down . Total biotech industry funding , from figures by William Blair Equity Research , rocketed from around $ 15 billion pre-COVID to a Q2 2020 peak of $ 35 billion but fell back to nearer $ 10 billion in mid-2023 .
Growth in the number of companies with active R & D pipelines from 4,800 in 2020 to 5,500 in 2003 greatly exacerbated this . By some figures , demand for capital at early- and late-stage biotechs has been running at 1.3x and 3x supply respectively . “ Emerging biopharma didn ’ t know where the bottom was , so there was what looked like a funding trough and a lot of them were holding on to cash ,” Scanlan said .
Effects of funding downturn
CROs and CDMOs have inevitably been affected . Sébastien Poncet , managing director of the Minakem ’ s Generics & New Therapies business unit , commented that no-one entirely escaped the effects of the funding downturn and recession in Europe . Minakem ’ s results are likely to be flat this year , but 2024 will be more challenging .
“ The number of signed projects used to be 15 to 20 per year , now it ’ s down to four or five ,” he said . “ Big Pharma is not investing any more , while venture capital is being far more selective and going for no-risk projects . Start-ups have been frozen for lack of cash and fewer innovative projects are coming through . Cash is king right now .”
Pierre Luzeau , CEO of Seqens , agreed that “ nobody can deny ” the effects of the trend on CDMOs . The IPO market has become clogged , which is another block to getting
16 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981