Specialist
Former VP at Lonza Group AG
Agenda
- Small molecule CDMO (contract development and manufacturing organisation) market overview and competitive positioning of major players
- Expected growth of small molecule outsourced manufacturing vs biologics
- Lonza's (VTX: LONN) divestment of its softgel business and Catalent's (NYSE: CTLT) divestment of its BFS (blow-fill-seal) business
- Expected pace of future divestments and potential acquirers or consolidators
- H2 2021 outlook
Questions
1.
What are some of the recent trends and themes in the small molecule CDMO [contract development and manufacturing organisation] industry?
2.
What pandemic-related disruption would you highlight, particularly around your growth expectations? Where might longer-lasting coronavirus impacts occur in the small molecule manufacturing industry?
3.
What are your growth expectations in small molecule manufacturing and different geographies? What do you make of the trend towards HPAPI [high-potency APIs]? How might that play into the broader discussion regarding outsourcing to APAC?
4.
What’s your take on the recent industry divestments, especially as it relates to pure-play or biologics or a small molecule combo under the same umbrella? What are your expectations around the competitive nature of each of those models?
5.
To what extent might the divestitures of finished dosage form business units be indicative of a broader industry push towards formulation or more upstream development services?
6.
What do you make of Catalent divesting its BFS [blow-fill-seal] sterile CDMO business and the ultimate goal to focus its portfolio towards biologics or higher-growth areas? You’ve spoken quite positively about Lonza and Cambrex. How does Catalent compare? What other steps would you expect in executing a strategy towards higher-growth areas?
7.
Were you surprised when Lonza divested its softgel business in Q1 2021, especially given the company’s positioning? What are its relative strengths and weaknesses in the small molecule segment?
8.
You highlighted the potential for increased growth in Europe, particularly for small molecule APIs from APAC. How might this impact Lonza vs other players, given that the company is headquartered in Europe? Do you expect it to capitalise on this trend?
9.
What notable strategies might apply to further divestments or consolidation of small molecule manufacturing assets? What’s your expected pace for similar divestments? Lonza’s assets were acquired by NextPharma, whereas Catalent’s were acquired by a PE firm, with the intent of having the assets perform as a standalone business. What potential divestments would be the most value-accretive?
10.
How would you quantify the pricing differentials across geographies, particularly in the US vs Europe, China or India? You mentioned the concerns highlighted by the pandemic because a significant portion of drug manufacturing, particularly APIs, happens abroad. How might any shift to Europe or the US impact pricing overall?
11.
What’s your assessment of Wuxi and its broader positioning? The company is increasing capacity in various verticals but what is your outlook on its capabilities? What are your overall expectations given the geographic dynamic you noted?
12.
Could you elaborate on the Indian companies you mentioned, particularly Divi and Syngene? What could be some growth sustainability considerations or potential advantages? You seemed to be less hopeful about the large molecule, but how might those players evolve?
13.
What would be key to discuss about the small molecule CDMO segment? Are there any notable players or other dynamics that are important for us to understand?
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