BIOSECURE and Catalent deal could bag more biz for Thermo

Introduced in the House of Representatives in January 2024, the US BIOSECURE Act aims to “ensure foreign adversary biotech companies of US national security concern do not gain access to US taxpayer dollars,” according to the bipartisan Select Committee on the Chinese Communist Party.

China-based, but global, contract development manufacturing organization (CDMO) WuXi Biologics has been caught in the crossfire of this bill and some end users are now concerned about their reliance on this capacity. However, Thermo Fisher described in its Q1 how the geopolitical tension could potentially make customers think about where partners are based and thus be beneficial for its own CDMO division.

“It's our job to help our customers navigate those shifting landscapes. I think at the highest level, […] relations are falling between the countries a bit [and] there will always be challenges,” said Marc Casper, CEO of Thermo Fisher during its earnings call.

“When I think about how this could play out, should it play out, I think that what is making the customer base that's largely Western in terms of where biotech and pharmaceutical activity is [to] think more about their supply chains, who's doing development work etc. Given our network is effectively 100% in US and Western Europe and that set of capabilities, we're likely to be a long-term beneficiary, not per se of the Act, but rather the fact that customers are thinking about who their partners are and where should those partners be based.”

Casper outlined to shareholders the firm does not think it will have “any material impact” to its results in the short term and said its “customers think in decades in this industry and when there’s events that make them uncertain, whether its BIOSECURE or whether it’s an acquisition of one of the suppliers, they look at the greater industry leader.”

Shakeup success

The acquisition referred to by Casper concerned the competitive shakeup in the CDMO space with investment firm Novo Holdings proposed $16.5 billion acquisition of Catalent in February. The deal will take Catalent private and sell three of its drug product manufacturing facilities to its company Novo Nordisk.

It is believed Big Pharma’s glucagon-like peptide-1 (GLP-1) boom drove the acquisition and the takeover is expected to have a significant ripple effect across the CDMO space, evidenced by fellow GLP-1 maker Eli Lilly allegedly inking deals with CDMOs National Resilience and BSP Pharmaceuticals in March because of concerns of the impending sale.

Casper described Thermo Fisher as the “market leader” in fill/finish and said this situation means “you have one of the pure-play competitors being taken out of the CDMO business effectively or less so.”

As a result, he told listeners “In an area where capacity is constrained already, it bodes really well for our business as the market leader and great reputation.” In reaping the benefits of the Catalent/Novo deal, Casper said he feels “great about it” with the firm’s activity level high, lots of conversation with customers happening, and securing new business.

For the first quarter 2024, the life sciences services firm reported sales worth $10.34 billion, a 3% decline year-on-year. Despite the decrease in revenue, the results exceeded the firm’s expectations of $10.17 billion and thus Thermo Fisher raised its 2024 full-year guidance from $42.1-$43.3 billion to $42.3 to $43.3 billion.