Catalent’s $315m Masthercell buy: Frothy exuberance or the new CMO norm?

Catalent has completed its $315 million takeover of cell therapy manufacturer Masthercell. But is this latest CMO acquisition a sign of frothy exuberance, or consolidation of the new normal? Dark Horse Consulting’s Anthony Davies thinks the latter.

Last week, Catalent announced it had entered into an agreement to buy Orgenesis’ third-party cell and gene therapy business Masthercell for $315 million (€285 million).

Yesterday the deal closed, bringing autologous and allogeneic cell therapy manufacturing and analytical services to Catalent’s capabilities.

Image: iStock/macgyverhh

The deal is the latest example of cell and gene consolidation within the contract manufacturing organization (CMO) space.

Since the start of 2019, Catalent leapt into the gene therapy space through the $1.2 billion acquisition of Paragon Bioservices, Thermo Fisher bought gene therapy maker Brammer Bio for $1.7 billion, Hitachi Chemical Advanced Therapeutics Solutions (HCATS) acquired German cell therapy manufacturing firm apceth Biopharma, and Tennessee-based cell therapy firm Cognate bought Swedish DNA and viral vector manufacturer Cobra Biologics.

Consolidation of the new normal

“Will it ever end? Is this latest substantial acquisition in the cell and gene therapy CMO field a sign of frothy exuberance or consolidation of the new normal?” Anthony Davies, founder and CEO of cell and gene therapy specialists Dark Horse Consulting asks.

“I lean towards the latter,” he tells Bioprocess Insider. “In the now mature field of biologics, CMOs have consistently remained somewhere between a critical safety net and a necessary evil, depending on one’s perspective. But they are not just still around, they are thriving, with no better global example than Catalent itself. The impressively long-tenured John Chiminski has methodically built an empire of profitable and highly regarded facilities.”

Catalent grew its softgel and small molecule businesses, under Chiminski’s tenure, before launching into the biologics space, which it has expanded both organically and through M&A. With Masthercell and Paragon onboard, the firm now claims to be “well positioned to lead the industry” in the cell and gene therapy space.

But for other cell and gene therapy manufacturers, Davies says the path has been less smooth.

For example, “Lonza has suffered through a relative revolving door of CEOs and a less clear strategy, seemingly unable to ride either the cell or the gene therapy waves of recent years.” Most recent CEO Marc Funk stood down after just nine months into the role.

Meanwhile, “Novartis’s litany of manufacturing problems, such as Kymriah’s seemingly unresolvable out-of-specification QC problem and [bluebird bio’s] Zynteglo’s EU delays, should remind us that this is not an easy business.”

But with more money and dealmaking in play, things look hopeful going forward, Davies concludes.

“With both substantial private equity money and biologics powerhouses now in the field, I predict gradually smoother sailing in the next few years.”