Specialist
Former VP at Lonza Group AG
Agenda
- Recent trends and developments in small molecule manufacturing
- Competitive landscape of top CDMOs (contract development manufacturing organisations) and emerging players, plus consolidation trends
- Expected growth of small molecule outsourced manufacturing vs biologics
- Margin profiles, potential headwinds, 2022 M&A expectations and growth opportunities
Questions
1.
What broader industry themes and recent developments have occurred in the small molecule contract manufacturing segment? What has changed since our previous Forum Interview [see Small Molecule CDMO Divestments – Impact of Growing Focus on Biologic Manufacturing & Potential M&A Activity – 14 August 2021]?
2.
We’ve continued to monitor the growth rate between biologics and small molecule, but are there any notable geographic dynamics or nuances? What do you make of the argument that biologics are taking over?
3.
There have been continued headwinds in the softgel and oral technologies segment, including Catalent and significant launches for new prescription products. How have you been tracking the segment’s recovery and what is your respective outlook? Which players stand out disproportionately as struggling here?
4.
What are the nuances developing by dosage form in the small molecule front? What is your outlook on this?
5.
I understand there has been significant pushback from clients of CDMOs [contract development and manufacturing organisations], given some labour dynamics and potential cost increases. Additionally, there is a key criteria or potential issue as a selection point, particularly in CDMO turnover. What’s your assessment on the small molecule front? How insulated is the industry from some of those dynamics?
6.
What is the potential increase in costs and ability to pass-through to clients, particularly given the industry’s challenging labour dynamic? Is that potentially increasing costs for CDMOs? How could that impact margins for small molecule firms?
7.
In our August Interview, you noted the consolidation in the CDMO industry, particularly in the US. How has this developed and to what extent is consolidation informing the supply-demand dynamic?
8.
In August, you suggested the US would be a laggard in driving demand for small molecule manufacturing, whereas Europe will be the first to experience a shift from outsourcing in APAC. How do you expect the supply-demand dynamic in Europe to play out?
9.
When could demand for small molecule manufacturing potentially fade across the US and Europe? To what extent is that a risk to your earlier comments about supply?
10.
Which smaller players should we track due to an ability to drive efficiencies or otherwise? You mentioned Cambrex but are you particularly impressed by any other companies?
11.
What is your estimation as to margin profiles across products in small molecule? Do you think scale, either via M&A or organic growth, drives operating leverage?
12.
What potential hurdles or headwinds should we note in the small molecule manufacturing industry? Are there any risks regarding pricing pressure or entry barriers?
13.
In assessing industry divestments vs your expectations, you were quite positive on Catalent in our August Interview, but a little more hesitant on Lonza given concerns around price point, potential delays and the company being a bit slow. What’s the latest? Where is Lonza playing in the industry vs your near-term expectations?
14.
Can you elaborate on your expectation for increased or continued industry divestments in the next year or so? You suggested Lonza might continue to grow in biologics and de-emphasise the small molecule. What strategies are likely?
15.
How did coronavirus change the end-customer demand across any subsegment of the small molecule market? Is normality recovering overall, or for products such as respiratory where demand declined significantly? What do you think this will entail in the longer term?
16.
Do you have anything additional to add or further outlook commentary for the small molecule market?
