PHARMA SPECIAL back to normal . The company ’ s early-phase work has been hit hard , but from Phase III onwards , it has been steadier .
The start of the year was not good , agreed Joachim Kaus , managing director – Germany at Curia . Everyone was affected by COVID , supply chain problems and then the funding issue . However , 2H 2023 is already looking better than 1H as funding has clearly started to recover .
Biotech funding , said Nick Shackley , senior VP commercial at Veranova , has become more focused . There are some areas of growth but some companies are sensitive to cash-burn and the market is less generous than it was , so now companies are tending to take only their lead molecule into early clinical where before they might have taken two .
Joerg Ahlgrimm , a former Lonza and Schering executive who is now SK Pharmteco ’ s new CEO , said that smaller pharma companies are repairing their pipelines to extend their cash and develop projects , while Big Pharma has not been much impacted . The company ’ s early stage services are down but commercial demand is as good as before .
Siegfried celebrated 150 years in business at Barcelona ’ s famous CasoBatlló
Upturn on the way ?
Scanlan also noted in his presentation that “ the last three quarters have seen the funding cycle start to flatten out ”. Total funding into the biotech sector to July was $ 30.2 billion and the full year is trending well ahead of 2022 . Investment bankers are expecting an upturn in deal-making in late 2023 , picking up speed in 2024 .
CDMO valuations dipped with the market and there have been fewer IPOs this year . However , as others also noted , private equity ( PE ) has not entirely lost its appetite for them . Most recent years have seen at least one $ 1 billion + acquisition or reshaping of a big player by financial investors and in February 2023 , Bain Capital bought FIS from the Ferrari family .
Some founding families are determined to hold on to ownership – like the Villax family at Hovione , the Negrisolis at Flamma and the Blochers , who have a majority stake in Dottikon Exclusive Synthesis – and the number of deals in the pharma services has been down , but Scanlan sees this coming back too . There is no doubt that PE will continue to shape the landscape .
Some analysts think that PE involvement in CDMOs will accelerate with the growing demand for outsourced services – not least because it took COVID to teach some of them that many pharmaceutical companies actually do little manufacturing . CDMOs , therefore , will need to get bigger and offer ever more services . That requires owners with deep pockets .
Long COVID
Another key background trend highlighted by both Scanlan and Gil Roth of the PDOA trade association during the press conference was the ‘ COVID cliff .’ Many pharma companies , notably Pfizer , and suppliers , notably Catalent , ramped up material and dosage form capacity massively to produce the vaccines . Much of it is now lying idle .
“ Everyone has been scrapping for business and there is a lot of overcapacity among CDMOs and Big Pharma companies ,” said Jordi Robinson , chief commercial officer at a new CDMO , Navin Molecular . The company is owned by India ’ s Navin Fluorine but has been effectively independent for years . It has now been established to market services based on many hazardous chemistry capabilities beyond fluorine .
The inevitable result of the overhang has been cost-cutting by affected companies . Pfizer has led the way with $ 3-4 billion in cuts , even as it buys to feed its pipeline ( see box story ). However , said Scanlan : “ That also bodes well for the pharma services world . The recipients of the assets they shed will be the CDMOs .”
“ COVID pushed a lot of companies to become CDMOs and those who had the largest exposure to COVID manufacturing are struggling now ,” Ahlgrimm observed . He has also noted a rise in disruptions caused by quality issues . Lilly , for instance , has experienced delays in a new product because of issues at an unspecified supplier .
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