Ahead of CPHI Milan – the world’s largest pharma event where a record 62,000 attendees are expected –, we spoke with Patrick Falvey, Principle Consultant from Latham BioPharma on the global trends ahead in bio manufacturing. Falvey is moderating a panel of analysts exploring new opportunities for CDMOs across biologics and advanced therapies space, its expected growth, and how CPHI is increasingly seeing larger numbers of bio-focused CDMOs as outsourcing's role in drug development becomes embedded.
Looking ahead to 2025, how do you foresee the outsourcing landscape evolving? Do you see a return to growth?
Ultimately the fundamentals are improving but growth has been slower than expected. We still have a period of about 12 to 18 months in which CDMOs are still going to experience some pressure regarding winning new contracts. For example, some of the smaller CDMOs are suffering a little but most of the larger CDMOs are, and will always, be okay. The large players (Lonza, Thermofisher, Catalent) continue to get the larger clients all the time. However the small to mid-sized CDMOs have seen a slower return to growth from smaller biotech projects.
A typical scenario for them is that they have a client for whom they work for a year or two and when that contract finishes, they have all the equipment, space, and personnel with nothing to work on. For example, we have had contacts from CDMOs as far away as Mexico looking for help to fill their extra capacity.
Is there still a ‘hangover’ from COVID?
Yes, I would say there is. When the money was flowing in, a lot of companies tried to develop COVID vaccines or went into COVID therapies, but if they weren’t first, second,d or third to market, they decided that they had to transition back into normal manufacturing. Post-pandemic governments suddenly reduced funding, plus there was a slowing in biotech, so it will take a little more time still for normal business to return.
How do you see the now [House] passed US Biosecure Act impacting the biologics sector?
Unfortunately, I see China-based CDMOs as being collateral damage, whereas India (Aurobindo or Enzene), and to some extent, South Korea (Lotte or Samsung Biologics), could be the principal beneficiaries. Korean CDMOs have a lot of capacity, and some have been building sites in Europe that they will need to fill. Having access to a deep ‘talent pool’ is, in my view, an essential consideration when selecting a partner. I always prefer to work with a CDMO that can troubleshoot and come up with problem-solving for me. I certainly don’t want to do the problem-solving myself. The China-based companies I have worked with have been excellent at problem-solving, so the challenge for India and Korea is to match that quality of work if we are eventually forced to move more US projects out of China.
So, the challenge for other potential partners will be building up their talent pools.
Exactly. Even if the BIOSECURE Act is passed, it doesn’t mean that all that talent is going to go over to India or Korea straight away. These things take time to develop, and it starts with recruiting the best talent and gaining experience with projects, so this is really a longer-term trend for the industry as pharma development networks are complex and timelines long.
What is the role of CPHI in this shift?
I think what you have seen post-pandemic is that live events are integral to meeting and nurturing new partners. What we have also seen is the acceleration of the trend for more diverse partners, and contingencies and to explore what is out there in terms of the idea mic of CROs, and CDMOs – especially as drugs become increasingly complex. So CPHI is a key part in oiling the machine that empowers the industry to develop drugs more quickly. And it is even a place where we now look at other suppliers and new technologies and how that might be beneficial. So in a globalized supply chain, CPHI’s role has never been more important, and I am here to widen my networks and continue to learn.
What is your perspective on the future of GLP-1s?
Undoubtedly, GLP-1s have been a brilliant development. The growth rate of drugs such as Ozempic has been phenomenal, and they have created a boom in themselves. One might wonder how long this boom is going to last, but as they look like they are very safe products, they should be for quite a while. However, there’s not enough capacity to manufacture them right now and meet the expected demand. After all, with up to 30, 40, or, 50percentt of certain populations being overweight, there’s virtually unlimited capacity in terms of the number of patients eligible – certainly in the billions.
I know that companies are working with oral formulations such as Rybelsus that are more straightforward to take, and that may well be the next step. For patients, a pill is always preferable to an injection.
What do you anticipate for active ingredients moving forward?
There are other peptides, apparently, in the pipeline, so CDMOs will have to develop the knowledge and the capacity to make them. This will be influenced by what we spoke about earlier – the ‘talent pool’. CDMOs will need to have the right subject matter experts and the right level of expertise plus the right equipment. If they need to recruit and invest, it will take a couple of years before they are really up to speed.
How might partnering models change over the next few years?
Companies are always open to different ways of working together. The way virtual or small startups partner today is very different from 20 years ago when they were expected to possibly buy a new facility or build from a greenfield or brownfield site.
Today, you don’t need to do that. Companies are open to going to meetings such as CPHI to check out their options. For example, if somebody has an idea and they have the financial backing, or they buy a couple of interesting peptides, and they’re willing to go into partnership with CDMOs or consider off-licensing or licensing from universities, they just need to get out and investigate the best next steps options as there is an array out outsourcing talent available.
Do you think new biotechs are staying independent longer?
Yes, they are probably staying independent longer, which is also good for outsourcing, but this means involving a lot of the VCs. Although it’s been very quiet over the last couple of years, VC activity is starting to creep up again as more money becomes available. So, you’re going to see them come more and more into the picture.
Is the number or value of the deals growing?
It’s growing again, but the number of deals is not as large as it was a few years ago. However, the cost or value per deal is going up.
What is your perspective on biotech M&As and CDMO M&As in 2025/26?
With interest rates starting to come down, you’re going to see more capital available at cheaper prices so I think this will help drive an uptick in biotech M&As. I predict a similar position for M&A activity among CDMOs. In addition, just this week we saw, three drug startups collectively raised more than $700 million in initial public offerings with Bicara Therapeutic, Zenas Biopharma, and MBX Biosciences. This trend will set to increase into 2025/2026.
Is there a particular area where you see strong growth over the next few years?
Yes, oncology is still going to be strong and a lot of money going into that space right now, particularly (mAbs) and other biological targets. Sure, after the development of mRNA vaccines for COVID-19, there was a large focus on how they could be harnessed for cancers. But, because cancers are person-based, defined by their genetic make-up, it was more complex than everyone thought, however, this is where the mAbs should come into their own, making them a potential winner again. The market alone for Oncology products in 2024 is expected to be over 220 billion dollars.
Author Details
Patrick Falvey, Principle Consultant- Latham BioPharma
Publication Details
This article appeared in American Pharmaceutical Review: Vol. 27, No. 6Sept/Oct 2024Pages: 92-93
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