CMOs to continue picking up Big Pharma non-core facilities

Recent facility acquisitions by Lonza and Catalent show Big Pharma is divesting its non-core assets in a trend that is set to continue, according to PharmSource.

In the previous couple of months, contract manufacturing organizations (CMOs) Lonza and Catalent have both increased their production networks through facility acquisitions.

Lonza’s expansion incorporates a sterile, multi-product drug product facility in Stein, Switzerland, acquired from fellow Swiss firm Novartis.

Image: iSTock/stevanovicigor

Catalent, two weeks prior, added its first biologics plant outside the US through a sterile product manufacturing and packaging facility in Anagni, Italy acquired from Bristol-Myers Squibb.

In both cases, the CMOs took on staff and assets and added their respective Big Pharma seller as clients.

Talking with Bioprocess Insider, Fiona Barry, associate editor of PharmSource – part of GlobalData – said the two sales are part of a wider trend whereby Big Pharma companies are abandoning diversification strategies and divesting their non-core assets, including facilities.

“For instance, in April Eli Lilly sold off some of its antibiotics, along with their manufacturing facility in China, most likely so it can focus on its core oncology programmes,” she said.

Meanwhile, “Johnson & Johnson has spoken about its search for a creative model to divest itself of multiple facilities, by possibly using private equity or another large investor to buy multiple facilities.”

Dose of M&A

Specifically, Barry said, the Lonza and Catalent examples demonstrate the most sought-after types of acquisition for CMOs.

“The GlobalData PharmSource report M&A in the Contract Manufacturing Industry: Implications and Outlook – 2018 Edition (December 2018) shows dose plants are the most likely of all facilities for CMOs to acquire: there were 24 purchases of dose facilities from 2015-2017, making up 41% of all CMO facility acquisitions by pharma. All but one of these dose facilities were for commercial manufacturing.”

And going forward, Barry said these sort of deals and divestments are only going to continue “as big pharma sheds facilities to CMOs, and spins off drug assets to create smaller pharma companies – as Novartis did with Anthos Therapeutics in February.”