We are in the ‘golden age for the CDMO space,’ says Thermo Fisher

With over 75% of new molecules coming from small and emerging biotech, opportunities for third-party manufacturers have never been so large says Thermo Fisher CEO Marc Casper.

Thermo Fisher jumped into the third-party biomanufacturing space in August 2017 through its acquisition of contract development and manufacturing organization (CDMO) Patheon for around $7.2 billion (€6.4 billion). The firm has also had capabilities in the CDMO since the early 2000s through its clinical trials’ service offerings.

Speaking at the 2019 Barclays Global Healthcare Conference, Thermo Fisher CEO Marc Casper said his firm, which now offers services from early development to commercial manufacturing, is set to benefit from the large outsourcing demand among biotech.

Springtime for CDMOs? Thermo Fisher believes so. Image: iStock/f9photos

“When I look at the dynamics in that business, we think it’s truly the golden age for the CDMO space,” he said, adding there are “two really interesting dynamics that have played out over the last couple of years, which is changing the way the industry is working.”

The first is that the majority – “north of 75% – of molecules coming through the pipeline are from small and emerging biotech companies without later-stage manufacturing capabilities.

“So they are looking to the CDMO industry to help them through that process,” said Casper. “Interestingly enough, because of the way the capital markets are shifted, these companies are actually going later through the process as opposed to selling out very early, [and] just selling out in later stage.

“And once the product is fairly late stage, you never move it, right? So you wind up with much more of a pipeline of commercial drugs in the CDMO market.”

The second dynamic focuses on new modalities such as cell and gene therapies, which, according to Casper, has led biopharma firms to have the wrong manufacturing networks.

“They have manufacturing networks that are mismatched with their demand. And, actually, the amount of interactions we’re having in the large pharma because of all the trust we have there to actually look at new ways of working with them and helping them develop the manufactured drugs is really the pipeline is incredible.”

M&A

Last month, Casper spoke with an analyst about potential large acquisitions in the life sciences space saying Thermo Fisher is on the hunt for potential bolt-on businesses or bigger.

Since then, the industry has been shaken up through Danaher Corporation’s proposed $21 billion takeover of GE Healthcare’s biopharma division which – if it goes through – will consolidate the bioprocess space.

But despite this, Casper remained confident his firm’s “very strong balance sheet” and “tremendous amount of capacity” could lead to a major deal being struck.

“We have a great track record of knowing, which deals to do and which deals not to do. And so we will be active this year in looking,” he said, though added this will not guarantee a purchase. “And so I feel good about the environment, right. There are definitely companies that are thinking about doing different things. And we have the capital and the capacity to build our business for the right transactions.”