It is a perilous time to establish a CDMO operation, says expert

CDMOs are not immune to current market conditions despite a stream of new entries and continued investment, according to industry veteran Roger Lias.

This year has seen a surge of contract development manufacturing organizations (CDMOs) enter the Life Sciences space. In June, the Public Investment Fund (PIF) launched Lifera, a commercial-scale CDMO to grow Saudi Arabia’s local biopharmaceutical industry. One month before, eXmoor pharma completed a $35 million Series A financing round to move the company into a full-service cell and gene therapy (CGT) CDMO.

And just a couple of weeks before eXmoor moved into the space, NewBiologix entered the CDMO scene armed with $50 million in funding to develop a CGT platform.  

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Meanwhile, established CDMOs have been upping their services. In September, Swiss CDMO ten23 Health announced it would add quality control (QC) services in 2024 at its Visp, Switzerland plant. MilliporeSigma – the life sciences division of Germany’s Merck KGaA – added 98,000 square feet of manufacturing capability to produce cell culture media at its Kansas, US facility in July. And in March, China-owned CDMO Pharmaron, announced it would build an additional 86,000 square-foot viral vector and DNA manufacturing facility, to bring a four-fold increase in gene therapy process development and analytical capacity accommodating DNA and RNA drug substance, as well as viral vector and drug product formulation.

Writing in a BioProcess Insider eBook, Roger Lias, an independent advisor and biologics CDMO industry advocate, said market demand remains robust partially due to the “rapid advances in advanced therapies [which] are catalyzing the emergence of a number of new market entrants specializing in the development and manufacture of viral vectors and cellular therapies as well as plasmids, messenger RNA (mRNA), and related products.”

However, with more CDMOs entering the space and already established CDMOs expanding their services and capacity, it is important to remember “CDMOs are not immune from current market conditions,” Lias wrote. “We must ask whether advanced therapies manufacturing demand can sustain the current number of start-up CDMOs and line extensions from established companies over the near term.”

Lias cited the recent announcement from Emergent BioSolutions that it will “deemphasize” its CDMO focus. Meanwhile, in August, Thermo Fisher Scientific decided to close its Alachua, Florida site to consolidate its viral vector services (VVS) and in April, the CDMO announced it is closing its Princeton, New Jersey cell therapy facility citing changing manufacturing demands.

“So, from some perspectives, it is a perilous time to establish a biologics CDMO operation. Anyone considering such a move should be concerned, especially regarding the advanced therapies space. Competition is growing even as the market experiences some turmoil.”

However, with that being said, Lias added: “The overall long-term market outlook remains positive, given continued solid growth in the antibody/protein sector, the establishment of mRNA, and related technologies (particularly for vaccines). Remarkable advances in cell and gene therapies continue to promise previously unenvisioned therapeutic patient outcomes and even cures for some cancers, rare diseases, and other illnesses. The biologics CDMO market remains strong, and those companies that can manage cash, differentiate in the marketplace, and execute on behalf of their customers undoubtedly will emerge stronger from the current challenges.”