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CDMO strategic deals 'the new standard,' say Catalent and DPx, but big and small pharma demands differ

Pharma's demands from manufacturing partners more complex from the start, say Catalent and DPx

Strategic relationships with contract manufacturers are becoming the standard, but big and small pharma demands differ considerably according to the two largest CDMOs, DPx and Catalent.

In March, Patheon merged with the pharmaceutical product wing of Royal DSM in a $3.7bn (€2.9bn) deal creating DPx, and at the time the firm told this publication strategic relationships were driving industry consolidation.

Six months on and Outsourcing-Pharma.com caught up with the world’s second largest contract manufacturing and development organisation (CDMO) at CPhI Worldwide in Paris, France where Francisco Negron, SVP North American Commercial Operations, said such partnerships were becoming the standard for both big and small pharma companies.

“We are seeing this trend, and I call it a move away from transactional relationships to strategic relationships. The fundamental difference is how early you are engaging with your customer in strategic decisions in the evaluation of their network and product portfolio.”

This shift is “unprecedented,” he continued. “A few years ago it was just a PO [purchase order] type transaction: ‘Make my product, send it to me, this is what I want for pricing’. It is now really strategic in nature, and we are talking with all different sizes of companies at the table very early in the process”

Negron’s European counterpart Antonio Magnelli added DPx was seeing different demands from Big Pharma who “are mostly interested in logistical relationships,” controlling their network and smaller firms looking for clear support within their product portfolio.

Concurring Catalent

There was a similar sentiment from Catalent Head of Marketing & Strategy Development, Jeremie Trochu, although he said he believed the term ‘strategic’ is often overused and badly defined.

For small biotechs, demands differ as “the reality is all of them are cash strapped” and so they may require Catalent’s services one phase, one trial or even one batch at a time.

However, for Big Pharma it is very hard to generalise as “they all have different strategies, all behave differently, and have different internal capabilities.”

“We have some [deals] where we have a strategic collaboration and the way that we would define them would be a combination of a contractual framework, not just doing a one-off,” he said, adding the value comes in the governance of such deals, jointly assessing metrics and KPIs and establishing trust.

Trochu did not dismiss the traditional ‘one-off’ manufacturing agreements. “In some instances they specifically have one need for development, or clinical supply, or commercial manufacturing and we will just execute that. I think the mix remains healthy.”

Catalent and Eli Lilly

“[Eli] Lilly is one of those customers where we have a formal collaboration framework,” Trochu told us.

“We have a set of metrics that they’ve asked us to review and monitor, and they do business across multiple of our offerings, and they are one of our very good clients,” he continued with “governance, investments, and innovation,” all playing a part in the relationship.

Strategic agreements can also trigger investments in new technologies and capabilities, troche added. “Depending on the type of deal, you may have customer funded dedicated tooling, or production suite, as in Kansas City where we made a serious investment for a particular customer.

“Some investments we’ll do jointly, where we’ll have the ability to use it in other projects, and some we’ll actually make the investment ourselves as we believe this is something that is in demand in the market.”

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