CDMO growth to be unpredictable over next five years, states CPhI WW report

CPhI Worldwide has revealed the finding from part i of its fifth edition of the CPhI Annual Report, which show the trend towards the integration of pharmaceutical outsourcing continues but the rate of change remains unclear.

This first part of the report features contributions from four industry experts — Gil Roth president, PBOA; Vivek Sharma, CEO at Piramal Pharma Solutions; BSV Prasad, sr vice president & head, Small Molecules Business, Biocon; and Sam Tadayon, executive director & Dr Minzhang Chen, CEO at STA Pharmaceutical.

Overall, the findings show that there is a continuing trend towards the integration of pharma outsourcing and single source providers for development are becoming more sought-after. However, future acquisitions are anticipated to not be dominated by big deals and large mergers with smaller commentary services and niche technologies set to fill specific gaps.

Additionally, flow chemistry and fermentation technologies are expected to be used more but adoption may be slow as a result of resistance to change within the industry. Trump’s administration in the US, the longer-term implications of drug pricing and big pharma income repartitions are highlighted as key unknowns and risks for the contract development and manufacturing organisation (CDMO) sector.

Roth, when speaking before Catalent’s acquisition of Cook Pharmica, suggested that the consolidation expected of the CMO/CDMO sector to improve the efficiency of outsourcing has not really panned out in 2017. He predicts that smaller scale buys to expand their current capabilities are far more likely by CDMOs, whilst ‘ex-US CDMOs’ may try to boost their US presence by acquiring an existing provider or an available pharma facility. He also highlighted the effect that the US administration may have regarding drug prices and reducing immigration, which could lead to ‘a shift in the talent pool of pharma employees to other more welcoming nations…’

Sharma forecasted that the one-stop-shop CDMO is coming to fruition in the industry, with biotechs clearly benefitting from this trend. In his opinion, over the next few years CDMOs in niche areas will offer more integrated value chains to customers and through this simplification venture capitalists will have a longer runway for investments and the potential for faster returns while also reducing risk. “From pharma’s perspective, this enables them to concentrate on broadening the number of drug discovery programmes they work on simultaneously and should expedite new drugs to market. In fact, over the next 2–5 years we will increasingly see more symbiotic relationships between pharma and CDMOs — with even capital and risk sharing deals,” he added.

In conclusion, he predicted that oncology will continue to see rapid growth with pharma and biotech witnessing medium term potential success. Therefore, Sharma said it is likely that CDMOs will invest in parallel areas such as high potency API manufacture, lyophilised/injectable products and antibody drug conjugation as the sector arms itself for the next wave of drug candidates.

Tadayon and Chen both predicted the potential of flow chemistry to revolutionise the industry, however, cautions were raised as implementation of this technology may be limited by regulatory challenges. “The message here is clear: for flow chemistry to deliver on its huge promise, pharma and CDMOs need to build the platform into the early phase process R&D of innovative API programs” commented Tadayon.

“In the next five years however, more advanced flow technologies will be developed and more companies will be developing continuous processes, while the existing scientists will build up more experience in this area,” added Chen. “As a result, we should expect a wider range of reactions to be processed through flow, and a lower bar to be established for selecting a process to be operated in flow. During this time, we expect to see more multistep flow processes performed.”

Additionally, the report highlighted how role fermentation could help to bring newer types of drugs through the development pipeline. Prasad highlighted the role it will have in helping to commercialise new vaccines, biologics and even problematic areas like the creation of new antibiotics that overcome antimicrobial resistance.

“In the last 5-years CPhI has grown its attendee base enormously, but during the same period, the event has established itself as a vital channel for industry research, analysis and trends,” explained Andreas Mavrommatis, global marketing director at UBM EMEA. “This year our Annual Report experts have highlighted flow chemistry, integrated CDMOs, and potential threats to outsourcing from a changing business environment. I would encourage all attendees to read a copy of the findings and also use CPhI Worldwide as a sounding board to explore how they might be able to work more efficiently, grow revenues and explore the latest development and manufacturing technologies. As well as an opportunity to meet existing customers, CPhI provides a steer on tomorrow’s developments and helps you explore the right partners to maximise the value in your business.”

The full report will be released during the show in Frankfurt.