CDMO Trends: End-to-End Service Providers

Will the trend of combining API and drug-product development and manufacturing services into a “one-stop shop” business model for CDMOs continue? DCAT Value Chain Insights examines recent deals and investments.

Tracking activity among end-to-end providers

The end-to-end business model, or the so-called “one-stop shop,” by which a single contract development and manufacturing organization (CDMO)/contract manufacturing organization (CMO) provides development and manufacturing services for both active pharmaceutical ingredients (APIs) and drug products, although not new to the industry, has been a model fueling mergers and acquisitions (M&A) over the past several years by companies such as Cambrex, Lonza, Catalent, Thermo Fisher Scientific, and Curia (formerly AMRI). These companies joined other end-to-end providers, such as WuXi AppTec and its related businesses, Siegfried, CordenPharma International, Piramal Pharma Solutions, and Almac to name a few. Below are some highlights of the larger M&A and investments of end-to-end providers announced thus far in 2021. 

Thermo Fisher Scientific’s pending $20.4-billion acquisition of PPD. A move to further augment its position in outsourced pharmaceutical services is Thermo Fisher Scientific’s pending $20.4-billion acquisition of the contract research organization (CRO), PPD. Announced in April (April 2021), Thermo Fisher agreed to acquire PPD, for $17.4 billion in cash plus the assumption of approximately $3.5 billion of net debt. The transaction, which is expected to be completed by the end of 2021, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals.

PPD provides a range of clinical research and laboratory services for drug development. In 2020, the company generated revenue of $4.7 billion and has approximately 26,000 employees globally. Upon close of the transaction, PPD will become part of Thermo Fisher’s Laboratory Products and Services Segment, which houses its CDMO business, which includes development and manufacturing services for drug-products, drug-substances (small molecules and biologics), and cell and gene therapies.

For Thermo Fisher, the move to become a full-service pharmaceutical outsourcing provider began with its $7.2-billion acquisition of Patheon in 2017, which at the time had already started a multiyear process of becoming an end-to-end contract services provider of APIs (both small molecules and biologics) to complement its historical core competency in formulation development and drug-product manufacturing. The key deal for Patheon dates back to 2014 with the formation of DPx Holdings B.V., privately owned by the private-equity firm JLL Partners (51%) and Royal DSM (49%), which was the result of a $2.65-billion deal between Patheon and DSM. Since 2012, Patheon had been active on the acquisition front with key acquisitions to build both its API and drug-product businesses.

Most recently, and like other end-to-end providers, such as Catalent and WuXi AppTec, Thermo Fisher has been building capabilities in cell and gene therapies. Earlier this year (2021), Thermo Fisher added to its contract viral vector manufacturing services with the acquisition of Henogen S.A., Novasep’s viral vector manufacturing business in Belgium, for approximately EUR 725 million ($875 million).

In addition, earlier this year, Thermo Fisher Scientific opened a new plasmid DNA manufacturing facility in Carlsbad, California to assist with plasmid DNA-based therapies and mRNA-based vaccines.

Lonza’s CHF 4.2 billion ($4.5 billion) divestment of its Specialty Ingredients business. In a move that showed its strategic emphasis on its core CDMO business, earlier this year (July 2021), Lonza completed the divestment of its former Specialty Ingredients business and operations to Bain Capital and Cinven, two private-equity firms, for an enterprise value of CHF 4.2 billion ($4.5 billion). The divestment strategically puts Lonza as a pure-player in bio/pharmaceuticals. The CDMO business of Lonza provides end-to-end development and manufacturing services for drug substances (small molecules, biologics, and cell and gene therapies) and drug products, principally oral solid dosage products through its $5.5-billion acquisition of Capsugel in 2017 as well as services for inhalation and parenteral drugs.

In August (August 2021), Lonza announced it was establishing drug-product manufacturing services at its site in Guangzhou, China. The investment will fund the installation of an aseptic drug-product fill–finish production line at the company’s 17,000–m2 mammalian-cell biomanufacturing facility to provide a combined drug-substance and drug-product manufacturing service offering at the site.

The Guangzhou facility began operations in the second quarter of 2021, and the first batch from the site is expected to be delivered later in 2021. The sterile, multi-product fill–finish production line will support the filling of liquid and lyophilized products for clinical trials and commercial batches. The installation is expected to be completed in 2022. To facilitate the installation of the new drug-product manufacturing line in Guangzhou, Lonza also plans to expand the footprint of its global drug-product services hub in Basel, Switzerland.

Also in 2021, Lonza started construction on a new CHF 200-million ($218-million) small-molecule manufacturing complex at its site in Visp, Switzerland. The complex will allow for future expansions supporting small-molecules technologies, including for drug substances, particle engineering, such as spray-drying dispersions, and drug products. The first build-out represents a customer-dedicated manufacturing line for antibody-drug conjugate payload molecules, which is expected to start its first operations in the third quarter of 2023. 

In addition in 2021, Lonza announced it its investing more than CHF 20 million ($22 million) to expand its laboratories and mid-scale manufacturing assets at its small-molecule API manufacturing center in Nansha, China. The expansion will include six 1,000-L small-molecule reactors, four 1,500-L vessels, and isolation equipment to provide mid-scale capacity to bridge between early-phase and late-phase production. The additional laboratories will be able to develop and manufacture highly potent APIs. The expanded laboratories and manufacturing facilities at Nansha are expected to come on line between the first and third quarters of 2022.

On the biologics drug-substance side, earlier this year (2021), Lonza  announced plans to invest approximately CHF 850 million ($935 million) to add two mammalian drug-substance manufacturing facilities at its sites in Visp, Switzerland and Portsmouth, New Hampshire. The expansion in Visp will add a new 27,500-square-meter large-scale mammalian drug-substance manufacturing facility. The facility is expected to be completed in 2024 with an investment of approximately CHF 650 million ($715 million). The expansion will complement the company’s existing large-scale biomanufacturing global network at its sites in Tuas, Singapore, Porriño, Spain, and Portsmouth.

In Portsmouth, the company is adding a new biomanufacturing facility for small-to-mid-volume production.The CHF 200-million ($220-million) facility will add capacity for up to eight 2,000-L single-use bioreactors to support Phase III clinical and commercial small- to mid-volume products. The facility is expected to be completed in 2023 and will complement the company’s existing single-use network at sites in Hayward, California, Slough, UK, Tuas, Singapore and Visp.

Private-equity firm EQT’s $2.8-billion acquisition of Recipharm. Earlier this year (2021), the private-equity firm, EQT, closed its $2.8-billion acquisition of Recipharm, a CDMO of APIs and drug products. In July (July 2021) Recipharm, reported on a new facility in Uttarakhand, India, to increase its fill-finish capacity to one billion sterile units per year. The new facility is the latest development in Recipharm’s partnership with the Sobti family, which began in 2019 when Recipharm invested in Nichepharm, a then newly created company by the Sobti family for production of sterile dosage forms. The new facility adds to Recipharm’s three other sterile-filling sites in France, Germany, and Italy. Also in 2021, Recipharm signed a memorandum of understanding with the Moroccan government and a consortium of the country’s banks to operate a new fill-finish factory in Morocco. The factory is planned to be operational by 2023 and will mirror Recipharm’s new fill-finish line at its facility in Monts, France on a larger scale.

Charles River Laboratories’ $1.2-billion acquisitions of the CDMOs Vigene Biosciences and Cognate BioServices. Charles River Laboratories, a CRO, made three deals to fortify its position in early development of cell and gene therapies. In June  (June 2021), the company acquired Vigene Biosciences, a Rockville, Maryland-based CDMO specializing in viral vectors, in a deal worth up to $350 million ($292.5 million upfront and contingent additional payments of up to $57.5 million). With operations based in Rockville, Maryland, Vigene will geographically expand and be complementary to Charles River’s existing gene-therapy CDMO capabilities, which it expanded through its $875-million acquisition of Cognate BioServices, a CDMO specializing in cell and cell-mediated gene-therapy products, in March (March 2021). Also, in March (March 2021), Charles River acquired Retrogenix, a UK-based early-stage CRO providing specialized bioanalytical services utilizing its proprietary cell microarray technology.

Multiple acquisitions by WuXi AppTec and its subsidiaries. WuXi AppTec and its subsidiaries announced several acquisitions in 2021 to further build its capabilities in biomanufacturing, including for cell and gene therapies, as well as drug-product manufacturing. In May (May 2021), WuXi Biologics announced the completion of three acquisitions: (1) Pfizer’s biologics drug-substance and drug-product manufacturing facilities in Hangzhou, China; (2) CMAB Biopharma, a biologics CDMO headquartered in Suzhou, China; and (3) a former Bayer biomanufacturing site in Wuppertal, Germany. All these acquired facilities are expected to be ready for GMP manufacturing in 2021.

In addition, in March (March 2021), WuXi AppTec completed the acquisition of Oxgene, an Oxford, UK-based contract provider of discovery and biomanufacturing services for cell and gene therapies. Oxgene became a fully owned subsidiary of WuXi Advanced Therapies, WuXi AppTec’s cell and gene therapy contract testing, development and manufacturing business unit.

Also, in 2021, WuXi STA, a subsidiary of WuXi AppTec, acquired a drug-product manufacturing facility from Bristol-Myers Squibb in Couvet, Neuchâtel, Switzerland. The facility has commercial-scale production capacity for capsule and tablet dosage forms. Through this transaction, WuXi STA has increased its global presence to eight R&D and manufacturing sites across Asia, North America, and Europe, including the recently announced US site in Middletown, Delaware. In June (June 2021), WuXi STA named Middletown, Delaware as the location of its new pharmaceutical manufacturing campus, which is expected to open in 2024. The future Middletown site will become WuXi STA’s second site in the US and will have clinical- and commercial-scale manufacturing capabilities.

Catalent’s acquisitions and investments in cell- and gene-therapies, biologics, and drug product-capabilities. Earlier this year (2021), Catalent acquired RheinCell Therapeutics, a Langenfeld, Germany-based developer and manufacturer of human induced pluripotent stem cells, which became part of Catalent’s Cell & Gene Therapy business.

In May (May 2021), Catalent acquired Promethera Biosciences’ cell-therapy manufacturing subsidiary, Hepatic Cell Therapy Support SA (HCTS), including its 32,400-square-foot facility in Gosselies, Belgium. The facility will accommodate Catalent’s commercial-scale plasmid DNA (pDNA) manufacturing and is located on Catalent’s existing campus in Gosselies, adjacent to the Delphi Genetics building. Catalent announced the acquisition of Delphi Genetics earlier this year (2021), a spinoff from the Université libre de Bruxelles and a bioproduction CDMO with capabilities in pDNA development and cGMP manufacturing. Catalent gained its facilities in Gosselies, Belgium with the $315-million acquisition of MaSTherCell, a provider of cell- and gene-therapy development and manufacturing services in 2020.

Late last month (August 2021), Catalent announced a large acquisition to build its position on the finished product side by agreeing to acquire Bettera Holdings, a Plano, Texas-based manufacturer of gummy, soft chew, and lozenger products, for $1 billion. The pending acquisition, which is expected to closed by the end of 2021, complements Catalent’s softgel and oral dose formulation development and manufacturing business.

In July (July 2021), Catalent announced that it will begin the first phase of a planned $100-million expansion at its facility in Anagni, Italy to add biologics drug-substance manufacturing. The initial expansion is expected to be commissioned and operational for customer projects in April 2023 and will increase the site’s workforce by up to 100 employees. Later phases of the planned expansion contemplate the provision of 16,000 liters of total flexible manufacturing capacity to enable 2,000-liter to 8,000-liter batch production scale. Catalent’s Anagni site now provides aseptic filling, secondary packaging, and oral dose manufacturing for late-stage and commercial product launches. Since Catalent acquired the facility in January 2020, it has become a European hub for COVID-19 vaccine manufacturing as well.

Also, on the biologics drug-substance side, earlier this year (2021), Catalent completed the expansion of two new suites at its biologics drug-substance development and manufacturing facility in Madison, Wisconsin. The expansion increased the number of manufacturing suites at the site to five to more than double its overall cGMP-scale capacity.talent has agreed to acquire the manufacturing.

Also in 2021, Catalent acquired the manufacturing and packaging operations of Acorda Therapeutics, an Ardsley, New York-based pharmaceutical comany, which included a 90,000-square-foot, facility in Chelsea, Massachusetts. The site operates spray drying capacity and provides Catalent with commercial-scale capacity.

New CDMO Resilience’s acquisitions of Ology Bioservices and other manufacturing facilities. Resilience, a recently launched manufacturing and technology company, made several acquisitions thus far in 2021 to build capabilities in biomanufacturing and fill–finish on the drug product side.

Resilience was launched in November 2020 with initial capital of $800 million with a specific focus on manufacturing innovation, including for new modalities. Its executive leadership includes Patrick Yang, Ph.D., Vice Chairman, Resilience, and former Executive Vice President and Global Head of Technical/Product Operations, Roche/Genentech, and Rahul Singhvi, Sc.D., CEO, and Director, and former Chief Operating Officer of Takeda’s Vaccine business, and former President and CEO of Novavax, a Gaithersburg, Maryland-based vaccine company.

In April (April 2021), Resilience acquired Ology Bioservices, an Alachua, Florida-based biologics CDMO. Ology Bio’s manufacturing capabilities include cell-and-gene therapies, live-viral vaccines and vectors, oncolytic viruses, plasmids, and monoclonal antibodies. Also in April (April 2021), Resilience acquired two commercial manufacturing facilities in North America, including a facility from Sanofi. The acquired facility from Sanofi is a 310,000-square-foot plant in Boston, Massachusetts, with multiple 2,000-L bioreactors capacity and multiple downstream processing trains. The company also purchased from an undisclosed partner a 136,000-square-foot plant in Mississauga, Ontario providing upstream and downstream processing and aseptic fill–finish.

In July (July 2021), Resilience agreed to acquire a clinical and commercial manufacturing facility Durham, North Carolina, from bluebird bio for $110 million. The 125,000-square foot facility manufactures lentiviral vectors, a component for cell and gene therapies.

Curia’s (formerly AMRI’s) acquisitions of Integrity Bio and LakePharma. Curia (formerly AMRI), already an end-to-end provider of small-molecule APIs and contract sterile manufacturing services, added biologics capabilities with its acquisition of LakePharma, a San Carlos, California-based contract research, development, and manufacturing organization specializing in the production and evaluation of DNA vectors, viral vectors, cell lines, proteins, antibodies, mRNA and conjugates. Curia also is adding to its drug-product capabilities with its pending acquisition of Integrity Bio, a Thousand Oaks, California-based CDMO of biologics formulation development and fill–finish manufacturing services.

Curia also announced last month (August 2021) that it is investing more than $35 million to expand its commercial small-molecule manufacturing capacity at its Rensselaer, New York facility. The expansion will include new vessel capacities that more than double the site’s batch-size scaling and product output. The expansion is expected to be completed within 18 months (as reported on August 19, 2021), adding to Curia’s existing API manufacturing facilities in the US, France, Spain, Italy and India.

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