The vibe at CPhI: Trends that are shaping contract manufacturing market

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This coverage is sponsored by: Catalent Pharma Solutions

The massive CPhI show kicked off in Barcelona, Spain, Tuesday with attendee numbers that rival some small cities. An estimated 38,000 visitors from 150 countries swarmed through the facilities. They came to meet, watch and listen to about 2,500 exhibitors that included everyone from the behemoths of the industry to the newer entrants who are being sized up for their abilities to be agile, quick and innovative.  

And what is on the collective mind of this "get it done" part of the pharma industry? Everything from the mergers and acquisitions landscape--which they say looks to be slowing--to the move to more biologics, opportunities in niche markets, spray drying technology and questions of how to define continuous manufacturing.

Yes, there was a lot to talk about with lots of announcements, such as from Morristown, NJ-based Capsugel, which announced expansions at three of its facilities. But to Keith Hutchison, SVP of R&D at Capsugel, CPhI is a "listening exercise as much as anything.” It is a chance to hear what is on the minds of clients.

Hutchinson, like others, noted the active mergers and acquisitions market of the last few years, which Capsugel has been a part of. But with company valuations rising as potential targets are snapped up, he thinks it will be more about targeted acquisitions rather than big “blockbuster plays.”

For his company that has included spray drying, a technology it snagged in the 2013 buyout of Bend Research and which it looks to replicate for EU customers. The equipment can be copied easily but the people expertise, Hutchison says, requires communication lines that put the right people in touch so that expertise is shared.

Aileen Ruff, VP of business unit strategy and marketing for Somerset, NJ-based Catalent ($CTLT), agrees that with “fewer high-quality targets,” companies like Catalent are looking for acquisitions that “fill the gaps.”

Catalent last month struck a deal to buy California-based Pharmatek Laboratories, a company that specializes in early phase drug development and clinical supply manufacturing. The buy adds spray drying technology to Catalent's capabilities.

The idea of getting into clinical supplies to do “patient-centric” work is a theme that came up repeatedly among experienced players at CPhI. The rationale, Ruff explained, is that drugmakers are having to be more focused with their R&D money and they want to find partners who can help them “optimize their paths early.”

Asked about continuous manufacturing Ruff nodded knowingly. Like many in the industry, Catalent is trying to get its head around a technology that makes tremendous sense in concept, but the adoption of which is being slowed by the fact that there is no definition yet of what it is or what it should be.

“There is a conversation going both ways between companies and their clients,” Ruff said. CDMOs want to offer the costs savings promised by a technology that is not batch dependent and comes with lower upfront and operating costs, and is easier on the environment. Clients are looking for their contractors to tell them if it is viable and when it might arrive. But because continuous manufacturing remains amorphous, Ruff says companies are proceeding cautiously.  

Anthony Sheehan, CEO at Saneca Pharma, a small Slovakia-based CDMO with a long history in producing opiate APIs, has watched the M&A action of the last few years and wonders if some of the companies have actually gotten too large. He has heard that some players that have strung deals together in recent years might be looking to unload pieces of what they bought after finding integration difficult.

“It is not that we wouldn’t to be doing some acquisitions,” said Sheehan, “but some of these companies have gotten so big so quickly that they seem to be having trouble managing their partnerships.”

Being an “old school” operator, the former Stada exec says he still believes that maintaining close relationships with customers remains essential. He sees that as one of the edges that smaller operators like Saneca have over larger competitors.

“Old-style relationships. You have to have them or you are not going to be able to fix problems when they arise,” he said.