In less than a week, the contract development and manufacturing organisations (CDMO) segment saw developments involving two drug companies, albeit of different hues.
An indication that the already competitive CDMO segment continues to attract more players as opportunities emerge in the UD and Europe, say industry watchers. But the terrain may not be as easy to navigate for traditional drugmakers, who are not pureplay CDMOs, caution industry watchers.
Late last week, Suven Pharmaceuticals dug deeper into the CDMO space, inking a layered agreement to acquire Hyderabad’s Sapala Organics Private Limited. This even as the private-equity-owned company embarked on its proposed merger between Suven and Cohance Lifesciences to build an end-to-end CDMO and active pharmaceutical ingredient (API) player servicing the pharmaceutical and specialty chemical markets.
On Monday, traditional drugmaker Lupin announced that its newly formed subsidiary Lupin Manufacturing Solutions (LMS) would start to build its CDMO business through APIs. The CDMO segment presently has several operators, including Syngene, Piramal Pharma, JB Pharma, and Divis, besides Dr. Reddy’s Aurigene, among others.
Different opportunities
The segment continues to hold out opportunities for pureplay players and those who may be more segmented players, says Annaswamy Vaidheesh, Suven Executive Chairman. From discovery to market API, it is a long space, and companies can participate in different parts of this value chain, he explains.
In fact, there is scope for more acquisitions as companies look at technology that is more futuristic, Vaidheesh told businessline. Companies like Suven will be selective in their acquisitions, looking at technologies that will make a difference to the platform, he said. For the industry, he added, the European CDMO space, for example, presents itself as an opportunity for Indian and European companies.
Outlining the competitive landscape, Vishal Manchanda, Senior Vice President (Institutional Research) with Systematix Group, points out that China is still a strong player, and shifting partners is not easy as technology transfers, etc. take time.
Drugmakers are optimistic that the US Biosecure Act will help push work their way, he said, but there’s competition. Multinationals seeking CDMO partners will look at those based in the US, Europe, and South Korea as well. Indian pureplay companies and those with overseas plants will also have an advantage, he adds. Besides, for those who are not pureplay CDMO players, there could also be a trust factor for innovator companies that may be competing with the Indian drugmaker on some other product, he points out. In such cases, another industry insider points out that the opportunity may come in API supplies for products that are close to patent expiration.