Full-service offering protecting CDMO biz from variable demand, says Thermo

“I have never seen customers pulling forward demand because they don’t want excess inventory of finished products,” says Thermo Fisher’s CEO.

Like other contract development and manufacturing organizations (CDMOs), Thermo Fisher firm stepped up during the pandemic and supported many of the vaccine and therapeutic projects, but – unlike some of its peers – the company remains confident it is in a good place to manage a post-pandemic demand drop, also known as the COVID cliff.

“The business is having very strong growth, is a nice contributor to our growth this year. We’re winning some very large pieces of business that sets [us] up for a bright future,” CEO Marc Casper said at the 5th Annual Evercore ISI HealthCONx Conference 2022 last week.

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“We’re not seeing any dynamic of customers bringing in demand or creating an air pocket for the future, but rather, actually, the demand and new wins has been very steady there. So I feel great about that business.”

Specifically, Casper pointed to the firm’s full range of CDMO services, which he said gives his larger customers – who are migrating to multi-process and multi-product relationships –  the flexibility to adjust contracts to suit their needs.

“We don’t have a crystal ball and therefore [they] might sign up for sterile fill finish right now. But in three years from now, if [they] don’t use as much sterile full finish, then we’re going to work on other things with [them] and shift those commitments because [we] have exquisite capabilities, right? And we’re really formulating some really interesting relationships around that business. And I feel really good about our competitive position.”

Thermo Fisher has been offering CDMO services since 2006. For the purposes of this publication, it became a major biologics producer in August 2017 through the $7.2 billion acquisition of Patheon.

Since then, the firm has invested heavily in its third-party biomanufacturing capabilities and branched out into other modalities, including gene therapies through the $1.7 billion Brammer Bio buy in 2019, and cell therapies the following year via an inhouse investment.

“We built out a complete suite of offerings and have been able to scale our capacity in a variety of different ways by taking over facilities from some of the larger companies that had excess capacity, doing some bolt-on acquisitions and investing in capital to expand the network so that we have just phenomenal choice for our customers on whatever their needs are,” Casper said.

“So today, we have leading capabilities in both drug substance and in drug product, small molecule, large molecule, and we built out a very strong presence in advanced modalities, including viral vector services for gene therapies, cell therapy services as well as nascent positions in plasmids, strong position in mRNA.”