CDMO New Business Strategy for Pharma Acquisitions

Oct 14, 2019
Article > For Pharma Services Firms, Big Assets Can Post Major Risks

Article >For Pharma Services Firms, Big Assets Can Post Major Risks

by Rick Mullin

Chemical & Engineering News, October 13, 2019, Volume 97, Issue 40

CordenPharma Colorado Peptide and Highly Potent API Manufacturing Facility in Boulder, CO, USA.

CordenPharma Colorado Peptide and Highly Potent API Manufacturing Facility in Boulder, CO, USA.


Drug services providers began acquiring drug companies’ manufacturing sites 20 years ago as, one by one, big pharma firms pared back in-house production. Acquisitions often appeared to be win-wins: the drugmakers continued to be served by the plants, and contractors got to bring in new customers. But converting large factories, some built to produce one blockbuster drug, to multiclient ventures has proved a huge undertaking. While many service providers have built stable businesses at sites acquired from drug firms, ventures continue to fail when the owners aren’t able to bring in new clients.

Excerpt with Dr. Michael Quirmbach, CEO & President, CordenPharma:

Michael Quirmbach, CEO of CordenPharma, the pharmaceutical services division of International Chemical Investors Group (ICIG), agrees that time cannot be wasted in making the changes necessary to bring new business into a former big pharma plant. “The clock is ticking, and 3 years is a very short time,” he says, referring to a standard duration for a service agreement with a drug company seller. “You need to quickly get people on board who understand the CDMO business.”

This includes marketing staff. In CordenPharma’s case, a team of 20 people coordinates contracts for a network of plants in the US and Europe acquired over 15 years. In that time, Quirmbach says, the company experienced just one unsuccessful venture: the purchase of an active pharmaceutical ingredient (API) site in Cork, Ireland, from Cambrex, another contract manufacturer, in 2006.

Quote from Dr. Michael Quirmbach, CEO & President, CordenPharma

Quirmbach says CordenPharma has learned a lot through experience. “Initially, ICIG just acquired these assets thinking all these plants can operate by themselves,” he says. “Then they realized they need a different strategy, a marketing strategy and platform for how they are going to market these services.”

The company also learned that the conversion of big pharma sites to service ventures requires real investment. The Plankstadt, Germany, site that CordenPharma purchased from AstraZeneca, for example, manufactured the cholesterol drug Crestor in finished-dose form. “But it had no development assets,” Quirmbach says. To attract new business, the firm built development labs and small-scale manufacturing capacity for finished drugs. It also built three smaller plants to accommodate the production of drugs for Phase I and II clinical trials.

Similarly, at its Caponago, Italy, site, where AstraZeneca manufactured the anesthetic propofol before CordenPharma bought the site in 2009, the company has invested $25 million in a lab and fill-and-finish plant necessary to attract new customers.

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