For the first quarter 2017, North Carolina-headquartered Patheon reported sales in its drug substance business saw 31% year-on-year growth to $130m (€121m) driven in part by its biomanufacturing services.
The contract development and manufacturing organisation (CDMO) entered the biologics sector in 2014 through its $2.65bn merger with DSM’s pharmaceutical product business and the subsequent acquisition of Gallus Biopharmaceuticals .
And speaking on a conference call yesterday, management said they expect to see the business blossom next year as products move out of development and into the commercial space.
“The vast, vast majority of all the [biologic] revenues are still today in development stage,” said CFO Stuart Grant, but he added “a good flow” of these products are beginning to be approved.
“We are seeing great sort of stickiness with regards to when we worked on the development scale, we end up being the commercial manufacturer, so our strategy I think is sound and indeed I think in 2018 you will start to see a shift of more commercial products.”
To support the shift to commercial products, Patheon president Michel Lagarde said the firm is stepping up its investment levels in biologics.
“This was a portfolio that was largely development business a couple of years ago and we're now getting ready for that shift and are making pretty significant investments in our biologic side in order to handle that shift in that growth.”
Details were not given, but a “significant” portion of last year’s $100m CapEx spend was focused on the biologics business. The firm has also been exploring a number of different biomanufacturing models to allow flexibility and choice to its customers.
We are Switzerland
During the call, Patheon revealed it works on biosimilar products for a number of its customers but Lagarde said there is no conflict of interest with its reference biologic clients.
“It's been pretty much always our model where we do not go exclusive on anything, so we don't have that inherent conflict,” he told stakeholders. “It occasionally comes up in a conversation that somebody says, oh, you know, we want you to make something exclusively. It could be a biosimilar or something else. And I think we pretty quickly walk people through that, so it doesn't really become an issue.”
He added the firm has also divested products acquired through M&A activity throughout its history to ensure neutrality.
“From our point of view, we are Switzerland: we make products for everybody. It's our obligation to protect all of their trade secrets and know-how, and we never really had any particular issues with that. And I think because we don't make any products on our own behalf, customers have been comfortable with it.”