Page 180 - CW E-Magazine (31-10-2023)

Special Report

2008 fi nancial crash. There are a multi- Promise of new/growing modalities they’ve slowed in the last two years,
tude of other factors/stories to tell, That’s not to say that the CDMO again due to this new world of real
but I’m no economist so I can’t gauge sector is shrinking. There’s been interest rates.
the validity of them beyond my own plenty of non-COVID growth in the
confi rmation bias. The upshot is that sector, and the various forms of -shor- The industry saw a major and fas-
as funding becomes tighter, companies ing have created opportunities for cinating development when Thermo
and investors have to make tough deci- companies with capacity in strategic Fisher, which had acquired Patheon in
sions about pipelines, and that trickles geographies. In addition, there’s the 2017 to add CDMO offerings, bought
down (or fl oods) the CDMO sector, promise of new/growing modalities: PPD, a major Contract Research
which must make capital-allocation CGT, CAR-T, ADCs, mRNA (duh) Organisation. As someone who’s seen
decisions of its own. and more. Of course, these new areas a variety of combinations over a near-
are not without risk. FDA is still rac- quarter-century in this fi eld, I’m quite
Rationalising of manufacturing ing to keep up with reviewing these interested to see how they integrate
capacity new modalities, hiring staff and deve- CRO offerings into their CDMO port-
Which brings us to another aspect loping guidance to better treat folio and their larger healthcare ser-
of the post-COVID environment for CGT applications. Meanwhile, reim- vices and equipment arsenal.
CDMOs: the rationalising of manu- bursement for some of these drugs
facturing capacity. CDMOs did a has proven diffi cult for insurers and Even in a challenging economic
phenomenal job of keeping up with national health systems. But CDMOs environment, the CDMO sector will
COVID vaccine and therapeutic manu- are positioning themselves in these continue to play a vital role in sup-
facturing demands, helping save the areas, with some spending billions plying their customers with new and
world in the process. As a thank-you, to build out capacity. As the agency long-standing treatments for patients
once the demand shrank/fell off a cliff, staffs up and fulfi ls some of the commit- around the world. A supply chain
some were left to their own devices to ments it made to innovator com- reckoning may be coming, but there
fi ll their expanded capacity. panies under the newest iteration of are limits to the changes that can be
the Prescription Drug User Fee Act, made and the very notion opens doors
In the early 2021 days of the vac- we could see signifi cant growth in to CDMOs who are in the right place
cine rollout, I took part in a forum new areas of drug manufacturing for with the right capabilities. Govern-
about vaccine production & future- CDMOs. But the lack of progress has ments will continue to explore ways to
pandemic preparedness where several some companies to pare back expecta- bolster manufacturing infrastructure,
participants noted that, without signi- tions in this space. and at some point that aforementioned
fi cant government investment, long- political will may come to bear in a
term contracts, and infrastructure/ All of that said, there are reali- way that makes manufacturing more
workforce commitments, the manu- ties of the CDMO sector that predate sustainable and enables this sector
facturing capacity that was collectively COVID and remain in place. It’s still along with larger pharma to be pre-
marshalled to respond to COVID was largely a world governed by private pared for what comes next.
not sustainable going forward, neither equity investment, notwithstanding
for CDMOs nor in-house pharma. several notable publicly-held CDMOs. Oh, you want my predictions on AI
The non-pharma industry participants PE funds have limited lifespans and and how it’ll affect manufacturing (as
declared that we were in a new world that results in sales of CDMOs to opposed to R&D/discovery)? You’re
where many governments now had poli- other funds or mergers with other CD- on your own with that one. . .
tical will to support and sustain such MOs or larger healthcare concerns.
capacity through public-private part- In the years leading up to the pandemic, ABOUT THE AUTHOR
nerships. I was sceptical at the time, we saw large valuations of CDMO Gil Roth is the President of the
and my predictions were accurate: assets, seemingly driven by the notion Pharma & Biopharma Outsourcing
governments have gone back to bicker- that CDMOs would provide some of Association (PBOA), a trade associa-
ing over healthcare spending and the steady revenue of pharma with tion advocating for the regulatory, legis-
pay lip service to “preparing for the little of the R&D pipeline risk (a Ph. II/ lative and general business interests of
next pandemic”, while pharma manu- III failure that leads to a startup shut- the CMO/CDMO sector.
facturing overall has been compelled ting down). Those acquisitions con-
to rationalise capacity. tinued into the COVID era, although [Source: CPHI Annual Report 2023]

180 Chemical Weekly October 31, 2023

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