{"id":21112,"date":"2024-10-21T15:17:26","date_gmt":"2024-10-21T15:17:26","guid":{"rendered":"https:\/\/makingpharmaindustry.it\/?p=21112"},"modified":"2024-10-21T15:17:27","modified_gmt":"2024-10-21T15:17:27","slug":"cdmo-and-the-de-risking-problem","status":"publish","type":"post","link":"https:\/\/makingpharmaindustry.it\/en\/manufacturing\/contract-manufacturing-en\/cdmo-and-the-de-risking-problem\/","title":{"rendered":"Cdmo and the de-risking problem"},"content":{"rendered":"

While the approach of large pharmaceutical companies toward outsourced activities is evolving toward more robust and structured partnerships, a widespread feeling of caution is shifting their focus from suppliers engaged in early stages to those active in more advanced stages<\/strong> of development or on established drugs, perceived as less risky than emerging therapies.<\/p>\n

This phenomenon is accompanied by the growingreluctance of investors to fund the early stages of research and development<\/strong> of gene and cell therapies both in terms of venture capital and IPOs. Also likely to suffer are the Cdmo and Cro engaged in the early stages of development, whose reach is gradually shrinking.<\/p>\n

Preclinical M&A declining<\/h2>\n

Drawing this scenario is the CphI annual report 2024,<\/a> published in conjunction with the international pharmaceutical industry event of the same name held in Milan in early October. According to the report, large pharmaceutical companies have significantly reduced outsourcing of research and development (R&D) activities in the early stages in recent years, favoring the acquisition of companies with development pipelines already in the clinical stages. Iqvia<\/a> has calculated that Preclinical M&A activities by 2023 represent less than 5 percent of the total.<\/strong><\/p>\n

Big pharma may also be pursuing a fundamental pivot away from outsourcing discovery and early R&D.<\/p><\/blockquote>\n

CphI annual report 2024<\/strong><\/p>\n

A critical economic framework<\/h2>\n

Charles River Labs (CRL)<\/strong>, a leading provider of early-stage drug development outsourcing services, announced in August 2024 that it had significantly cut its forecast<\/strong> due to a substantial and permanent decline in the research and development services required by big pharma.
\nAccording to the report, this trend is heavily influenced by the phase of rationalization and de-risking<\/strong> undertaken by big pharma after the Covid19 pandemic. Indeed, in the past year, the race to cost reduction<\/strong> has continued, also due to the pressure of the many critical economic and financial issues, such as the loss of exclusivity<\/strong> on many products (analysts calculate that big pharma will lose rights for $180 billion<\/strong> until 2033), high US interest rates, and persistent inflationary pressure.<\/p>\n

The biotech indicator<\/h2>\n

.
\nOne indicator for determining the health of the CRO\/ CDMO sector, the Cphi report goes on to explain, is funding to biotechnology<\/strong>(nearly two-thirds of all drugs submitted for FDA approval come from these companies), which has come to a significant halt in the past two years (see chart<\/strong>).<\/p>\n

Although in the first half of 2024, overall funding shows signs of recovery, private venture investments in biotechpreclinical stage were about 28% of the total<\/strong> through mid-2024 (~$3.5 billion), declining from previous years<\/strong>.
\nIPO also seems an increasingly less viable option: the percentage of IPOs (initial public offerings) in preclinical companies is about half of what it was in the previous four years.<\/p>\n