Analyst: CMOs to prosper as biopharma reduces capacity sharing

By Dan Stanton

- Last updated on GMT

Related tags Biotechnology

Reduced network? Despite Pfizer still offering spare space, shrinking manufacturing capacity is a boon to CMOs says analyst
Reduced network? Despite Pfizer still offering spare space, shrinking manufacturing capacity is a boon to CMOs says analyst
Biopharma firms are no longer offering spare capacity to rivals, according to an analyst, who says the trend is benefiting large CMOs.

Across the biomanufacturing world, “contract manufacturing capacity is tightening,” ​Jefferies analyst David Windley said in a note yesterday, due in part to “Biopharmas no longer offering out their excess capacity to each other.”

Along with reductions in internal capacity leading to a growth in outsourcing, such trends come as a benefit to contract manufacturing organisations (CMOs) “because they allow it to be more selective in the projects accepted,”​ he added, which “should also result in greater pricing power.”

Windley’s comments were off the back of his first analyst note for the CMO Catalent which raised $872m (€675m) in an IPO in July and brought in the closing of the New York Stock Exchange yesterday​.

“Catalent is the undisputed leader in the outsourced pharma manufacturing segment,” ​Windley said, and recent investments in its biologics offerings will bring benefits in the current market environment.

Last year, the firm opened a fully single-use 100,000sq ft facility in Madison, Wisconsin, which it bought and upgraded from GE Healthcare in 2011, effectively quadrupling its biologics services​. Furthermore, the now public firm has expanded in its own GPEx cell line development and manufacturing technology and increased its stake in the SMARTag antibody-drug conjugate (ADC)​ platform.

Pfizer as a CMO

Catalent is far from alone in the biologics contract manufacturing industry, with companies such as Lonza and Patheon – through the recent acquisition of Gallus BioPharmaceuticals​ – having capacity and therefore set to benefit from growing outsourcing trends.

However, despite Windley’s predictions, Pfizer has been bucking biopharma’s trend, expanding its biomanufacturing capabilities – in Ireland for example​ – whilst also offering extra space to its rivals.

Its microbial and yeast cell culture based plant in Strangnas, Sweden was approved for contract manufacturing in 2010 and though its focus remains on its proprietary products, “the climate is changing so this plant is open for CMO opportunities for small or larger companies that need manufacturing capacity,”​ site leader Kirsti Gjellan told this publication last year​.

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