Five deals reshaping the CDMO industry this year

By Ben Hargreaves contact

- Last updated on GMT

Five biggest CDMO deals of the year

Related tags: CDMO, Thermo fisher scientific, Catalent, Lonza, Ge healthcare, Danaher, Fujifilm

The major trend so far in 2019 is the willingness to deploy capital to expand services in the cell and gene therapy sector, and we outline the five most significant deals thus far.

Dealmaking has been prevalent across the pharmaceutical industry in the first half of this year – particularly large-scale deals that have seen companies invest significant sums to expand capabilities.

The most recent to take place was the proposed takeover of Allergan by AbbVie​ for a potential $63bn (€55.3bn), as the latter company looks to secure growth with developing biosimilar competition to its biggest seller, Humira (adalimumab).

The beginning of the year also saw a deal of a similar scale, with Bristol-Myers Squibb currently preparing for the completion of its $74bn takeover of Celgene​. BMS CEO, Giovanni Caforio, stated, at the time of the deal, that the buyout would provide the company with a leadership position in oncology through the expansion of its cell therapy portfolio.

In the CDMO market, there are similar lines of thinking to the major deals that occurred – with the manufacture of cell and gene therapies at the forefront of industry thinking.

More specifically than this, CDMOs are eyeing the gene therapy market as a source of significant growth in the years to come.

1. Thermo Fisher – Brammer Bio

Thermo Fisher Scientific decided to spend $1.7bn to acquire Brammer Bio in March, a company which specializes in vectors for in vivo​ gene therapy and ex vivo​ gene-modified cell therapy.

At the time of announcing the deal, a spokesperson for the company told BioPharma-Reporter that the ‘rapidly growing’ pipeline of gene therapies makes the market particularly attractive to the CDMO.

This is backed up by research conducted by PhRMA, which found that there are approximately 300 cell and gene therapies​ currently in various stages of development in the US.

In addition, gene therapies are now progressing to reach the market at a faster rate, with Novartis receiving approval for Zolgensma​ (onasemnogene abeparvovec) and bluebird bio receiving a conditional marketing approval for its first approved therapy​, Zyntelgo (autologous CD34+ cells encoding βA-T87Q​-globin gene) within a few weeks of another.

Thermo Fisher’s move to bring Brammer into its business shows the company is looking at the long-term future of the gene therapy market, as approved treatments will require further viral vector supply to meet therapy demand, and more companies look to enter the space, based on the prior regulatory success of others.

2. Catalent – Paragon

Catalent operates at a similar scale to Thermo Fisher and completed a very similar deal only one month prior, through its $1.2bn purchase of Paragon.

The focus of the deal was, again, to acquire Paragon’s ability to produce viral vectors for gene therapy, as well as lentivirus vectors, and plasmids.

Catalent also pointed to the growth of the gene therapy market as the primary driver behind the purchase, noting that the market could develop to be worth $40bn in the coming years.

Earlier this month, Catalent followed through on its stated aim to further invest in Paragon’s capabilities by acquiring gene therapy assets from Novovax for $18m​.

3. Fujifilm – Biogen facility

Fujifilm has been instigating a number of expansions for its CDMO subsidiaries in recent times, one of the largest came in the form of Fujifilm Diosynth Biotechnologies purchase of Biogen’s biologics site for $890m.

The facility allows for production at scales of pre-clinical all the way through to commercial levels, including the ability to manufacture biosimilars.

At the time of the purchase, Fujifilm noted that it was engaging in ‘aggressive investment’ for building out its manufacturing capability.

This expansion has seen Fujifilm’s subsidiaries complete strategic acquisitions and expansions, including increasing its offering for the materials necessary for viral vector production​.

In addition, this week, Fujifilm announced the proposed building of one of the largest production facilities for the company outside of Japan. The Netherlands site​ will be responsible for producing cell culture media, liquid media, and downstream bioprocessing liquids.

4. Lonza – Novartis facility

The financials of Lonza’s takeover Novartis Stein, Switzerland, facility were not released but the scale of the site, containing a fill-finish facility, laboratories, and office space, alongside utility and storage space, suggests a larger-scale investment.

Opened in 2009, the facility is able to produce clinical and commercial scale production of sterile biologics, as well as small molecule parenterals.

This straight forward facility purchase comes alongside further innovative developments that Lonza is undertaking in expanding its capabilities – such as on the automation of the manufacture of chimeric antigen receptor (CAR)-T therapies​.

At the time, Lonza’s head of clinical development for Lonza’s personalized medicine group, Matthew Hewitt, told us that developing such technology is important as further cell therapies are approved and patient populations broaden, requiring a more efficient production process.

5. GE BioPharma – Danaher

This deal represents a different side to the acquisition and expansion seen elsewhere in the industry, with the overall GE business deciding that $21bn in cash was a suitable sum to exit the space.

Conversely, it shows how highly companies value this side of the CDMO industry, with the acquisition price many times higher than the $3bn in revenue it generated during 2018 for the overall GE Healthcare business.

Danaher has previous experience with acquisitions of such a scale, after it acquired Pall Corporation for $14bn back in 2015​.

When BioPharma-Reporter spoke to CEO of GE Healthcare Life Sciences, Emmanuel Ligner,  he stressed that the business is operating as normal​ and that it is currently positioning itself to alter its existing technologies to match the demands of the industry. He provided the example of altering its chromatography columns to be suitable for CAR-T as the way that the business has had to adapt, as cell therapies see greater uptake.

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