Acquisition-hungry Danaher Corporation could continue to eye-up CDMO opportunities despite reports it has given up on Catalent.

In February, the Danaher rumor mill turned to the tune of a potential $20+ billion takeover of contract development and manufacturing organization (CDMO) Catalent. But this week Bloomberg reported Danaher’s acquisitional interest has fallen, citing people familiar with the matter.

Reasons why the alleged deal has fizzled out were not divulged, but Catalent’s stock price dropped 26% last week after the firm reported “productivity challenges and higher-than-expected costs” across its biomanufacturing network.

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Danaher Corporation’s life sciences offering has grown over the years through an aggressive M&A policy that includes the multi-billion-dollar additions of Pall in 2015 and Cytiva in 2020. The combination of those two entities – expected to complete in the coming weeks – means Danaher offers the broadest bioprocessing portfolio in the industry, from cell culture to drug product.

In a sector where M&A has been rife, Danaher management has been vocal about no having any gaps to fill on the bioprocess side. “The scope and the scale that we’ve built, the ability to drive solutions globally is unmatched,” CEO Rainer Blair said in January 2022. “We really don’t see any material gaps.”

But what Danaher is missing is a robust production network ripe to capitalize on the competitive advantages from its bioprocess synergies like rival vendor Thermo Fisher, which leverages its broad equipment and consumable business with an extensive manufacturing system acquired from Patheon, Brammer, and others.

Thus, with Catalent out the picture – at least for now – there continues to be a CDMO-shaped hole in Danaher’s business. Sure, in 2021 the life sciences conglomerate laid out $9.6 billion to bring Aldevron under its wing. However, Aldevron’s range of mostly plasmid DNA and mRNA services focuses on the still burgeoning advanced therapy space, and while this may prove to be lucrative Danaher still lacks the big bioreactor capacity or commercial fill-finish capabilities that bring in the big CDMO bucks over at Thermo.

So where does this leave Danaher? The firm may reveal more in its Q1 2023 financial call next week – though don’t hold your breath on specifics – but from previous corporate presentations we must assume CDMO M&A remains in the crosshairs.

“Our funnels continue to be very active,” Blair said during his firm’s Q4 2022 call in January. “Our balance sheet […] We’re starting to see in the marketplace some recognition and I’ll even say some acceptance of the lower valuation levels that we have now seen for a good period of time. And I would say it is early days, but the environment for M&A continues to improve.”