COVID-19 an opportunity for outsourcing sector, say leading CDMOs

COVID-19 has increased demand for outsourcing but it is too early to tell what long term impact the pandemic will have, say leading CDMOs.

Lonza has received more than 40 inquiries about COVID-19 related projects, says CEO Albert Baehny. He told analysts the pandemic “has already offered some new and important opportunities, which are currently under review.”

He added, “Inevitably we cannot engage and collaborate in all of those projects. Instead, we are focusing our efforts on selected key development projects relating to both vaccines and therapeutic treatments.”

Image: iStock/lucky-photographer

Lonza is likely to use its Ibex Solutions model for some of the COVID-19 projects according to Baehny, who said “If I look today at what we are experiencing in terms of requests, linked to COVID-19, then I would be tempted to accelerate Ibex clearly.

“The human challenge is a clear challenge, but I am surprised – positively surprised to say that so far, we have been able to attract the talents we need not only the quality, but the quantity of the talents we need linked to Ibex in Visp in Switzerland.”

Sector impact

Beyond the surge in projects, COVID-19 has had little impact on Lonza’s wider business Baehny said, explaining “we have not been impacted in Q1 with cancellation, with delays on any clinical programs.”

He was less optimistic for the contract development and manufacturing organization (CDMO) sector as a whole, adding “it is clear that today the FDA is postponing reviews as well as facility inspections.

“So we can expect in the industry in general that there will be some delays or maybe suspensions of clinical trials,” he said, pointing out Lonza generates most of its revenues from approved and commercialized drugs.

Vaccine expansion

Thermo Fisher Scientific – which owns CDMO Patheon – also spoke about COVID-19 during its quarterly results presentation this week.

CEO Marc Casper told analysts “We’re partnering with a number of Pharma and biotech customers who are working on dozens of top pandemic related projects.

“Our involvement includes leveraging our pharma services network to produce existing drugs that are showing some effectiveness in treating COVID-19.”

Thermo Fisher is also increasing capacity in response to the pandemic Casper said.

“We are working to accelerate the expansion of our sterile fill-finish capacity to support production once a successful vaccine is developed. In addition, our bio production business is providing a scalable purification solution to accelerate vaccine production.”

Logistics headwinds

Looking forward Thermo Fisher predicts that its contracting business will be relatively unaffected by COVID-19 in the next quarter.

Casper said, “For Q2…We would expect similar trends on the production side of the equation, some more impact on the positive from COVID in terms of all the projects that are going on.”

One area likely to see an impact is Thermo Fisher’s clinical trial logistics business according to Casper.

“There will be some impact on some level of clinical trials activity. Customers also want to be able to reengage in clinical trials. So some of that activity, they’re actually working with us to be ready, so you have some of that going on as well.

“You have COVID activity on clinical trials going up as well. So I think you got a mix. But of the pharma services portions of the business, the clinical trials activity would be the one that would have some headwind potentially.”