Pandemic and transformative technologies fuel growth in pharma outsourcing sector: CPhI North America panel

Transformative technologies and the opportunities afforded by the COVID-19 pandemic have spurred investment in the life sciences outsourcing sector, according to a panel of industry experts speaking at CPhI North America on Monday.

In the webinar, US Pharmaceutical Market Outlook 2021: CDMO Deal Making in a Pandemic and Beyond, James Gale, Managing Director at private equity firm, Signet Healthcare Partners, told the audience that despite an initial economic slowdown in 2020 due to pandemic-linked uncertainty, “as a lot of money was pushed into the economy by the fed, the capital markets have gone up dramatically creating a huge inflow of cash to the life sciences industry and supporting R&D activities.

Gale said the breakthrough achievement of the COVID vaccines by Pfizer and Moderna has spawned an entirely new platform for vaccine development.

“Our belief is that there are exciting new technologies that are coming along that are transforming the practice of medicine, principally things like immunotherapy, cell and gene therapy, new vaccine forms that are increasingly creating new opportunities for treating patients,” he added. “These are the kind of technologies that have really engendered a lot of enthusiasm for growth and much of that is being outsourced.”

He said that during the last year, Signet has been involved in five life sciences transactions including an investment in CDMO Ascendia Pharmaceuticals, a recapitalisation of CDMO CoreRx, acquisitions of speciality devices company, GI Supply and pharma services company, Altasciences and the sale of viral vector-based CDMO, Vigene Biosciences.

Also on the panel, Robert Bloder, Chief Business Officer, Ascendia Pharmaceuticals described the Signet deal as “one that was in the gun sights of our founder CEO Jim Huang for several years as he had been bootstrapping the company for around nine years and really looking at one significant investment and building out his portfolio of technology platforms that allows us to work with virtually all of the dosage forms available today, which is important for new chemical entity and early stage work.”

He added that the investment is key for Ascendia to continue to grow with its partners “that we have built trust with from the very beginning in the nascency of their molecules and their investments and we wanted a route that was a strategic partner for us.”

“As we continue to expand in both our sterile and non-sterile facilities we see that serving us well in the short and intermediate terms,” he said.

Ramesh Subramanian, Chief Commercial Officer at CDMO Aragen Life Sciences (formerly GVK Bio) said that investment bank Goldman Sachs had recently taken an approximately one-third minority stake in the company after the exit of one private equity investor.

After a process lasting 12 months, which started with interest from around ten funds, Goldman Sachs was chosen from a shortlist of three blue chip funds.

“We thought Goldman was the best, based on the valuation based on their vision for where they wanted to go with the company,” Subramanian said.  “The goal with Goldman is that they bring a lot of intellectual and financial capital to Aragen and we have very aggressive plans both in terms of adding capabilities and growing new geographies and with then as a partner it allows us to get there sooner.”