Under New Ownership: Consolidation Reshapes Contract Services Market

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Mergers and acquisitions have changed the shape of the contract services market as big players seek to build full-service capabilities. A review of transactions--as reported in company press statements--highlights some recent shifts in drug discovery, development, and manufacturing services.

Consolidation of the contract service market continued in the past 12 months, as service providers expanded capacity and filled gaps in their portfolios.

“Ongoing consolidation enables major pharmaceutical companies to optimize their supply networks and source a greater range of services and technologies from fewer partners,” said Elliott Berger, vice-president of global marketing and strategy at Catalent Pharma Solutions (1).

“The increased bandwidth, capacity, and capabilities, together with an expanded regional and/or global presence, are valuable to biopharma companies. Improved economies of scale and a simplified supply chain are also important benefits,” said Michael Lehmann, president, global PDS and executive vice-president global sales & marketing, Patheon (1).

A “one-stop-shop” service offering is a popular theme among large contract research, contract development, and contract manufacturing organizations (CRO/CDMO/CMO). Acquisition efforts are geared to fulfill this strategy, as contract service providers seek to fill gaps in their research, development, manufacturing, or geographic capabilities.

Filling out portfolios
In September 2015, Pfizer acquired Hospira’s One 2 One contract development and manufacturing services for injectable drugs as part of the merger of the two companies. Fareva acquired an API manufacturing site in France from Merck.

Patheon added API development and manufacturing capabilities, including high-potency and controlled substances, with the acquisition of IRIX Pharmaceuticals in April 2015. In March 2015, the company acquired Agere Pharmaceuticals, a CDMO that specializes in improving bioavailability.

Also in March, Catalent Pharma Solutions acquired Pharmapak Technologies Pty Ltd., a packaging business based in New South Wales, Australia to provide regional packaging capabilities and complement the company’s existing facility in Braeside, Victoria.

With the acquisition of Coldstream Laboratories in January 2015, Piramal added clinical and commercial sterile injectable manufacturing capabilties.

Multiple acquisitions
Albany Molecular Research Inc. (AMRI) completed multiple acquisitions in 2015. In January, the company acquired Aptuit’s Glasgow, UK, business, adding capabilities in sterile injectable drug product formulation and clinical-stage manufacturing. AMRI also acquired Aptuit’s SSCI/West Lafayette, IN facility, adding expertise in material science and analytical testing capabilities for peptides, proteins, and oligonucleotides. In July 2015, the company acquired Gadea Pharmaceutical Group, an APIs and finished drug product manufacturer in Valladolid, Spain. In December, AMRI acquired Whitehouse Laboratories to augment the company’s discovery, development, and manufacturing services.

Charles River Laboratories expanded its endotoxin and microbial detection services in July with the acquisition of Celsis, a manufacturer of rapid bacterial detection systems. In November 2015, it acquired Oncotest GmbH, a Freiberg, Germany-based CRO that provides discovery services for oncology. In January 2016, Charles River acquired WIL Research, adding new specialty services in safety assessment, bioanalysis, and CDMO services.

Xcelience had a busy year. In July 2015, the company added particle-size control solutions by investing in Powdersize, a Pennsylvania-based company specializing in milling, micronization, and powder size. In October, Xcelience opened a 71,000-sq-ft headquarters to house preformulation and formulation development labs and suites, and analytical and stability services. Then, in January 2016, Capsugel acquired both Xcelience and Powdersize and integrated the companies into its Dosage Form Solutions business unit.

Ropack purchased two pharmaceutical facilities formerly operated by Forest Laboratories in Long Island, New York, adding 213,700 square feet  of research and development, formulation, lab analysis, and commercial and clinical manufacturing capabilities to the company’s solid oral-dosage packaging and clinical study distribution offerings.

Abzena acquired PacificGMP, a San Diego-based CDMO, in September 2015, to provide additional support for the development of products based on the company’s proprietary protein engineering and bioconjugation technologies. In August 2015, Hepalink USA acquired Cytovance Biologics, a biopharmaceutical CDMO.

Evans Analytical Group (EAG), an independent laboratory network, announced in July that it acquired Analytical Bio-Chemistry Laboratories (ABC Laboratories) of Columbia, MO. ABC Laboratories offers development and cGMP and good laboratory practice-compliant testing capabilities.

In December, SGS added chemistry and microbiology testing services in Canada-including elemental impurities analysis, tablet dissolution, and bacterial identification-with the acquisition of Quality Compliance Laboratories.

Formulation activity
In December, Quotient Clinical acquired contract development company Co-Formulate Limited to extend its existing pharmaceutical development capabilities across solid, semisolid, and liquid formulations. Co-Formulate is based adjacent to Quotient’s GMP facility in Nottingham, UK.

Hovione acquired a formulation facility adjacent to its current process chemistry and particle engineering facility in Loures, Portugal to boost development and manufacturing capabilities for inhalation and oral dosage forms.

BASF stepped away from the custom synthesis business and parts of its API business in October 2015 with the sale of those assets to Siegfried Holding AG.

Contract manufacturers report expansions
In January 2016, Lonza announced the expansion of mammalian production capacity at its Slough, UK facility including the installation of two 1000-L single-use bioreactors. The site provides cell line construction, process development, and clinical manufacturing services for mammalian-derived biotherapeutics.

Vetter announced in September 2015 that it will invest $335 million to expand and upgrade its manufacturing facilities over a five-year period. Expansion of three sites in Germany will add capacity for logistic services and drug-product manufacturing using an improved system for aseptic processing.

In August 2015, Mayne Pharma announced plans to invest $65 million to expand facilities and equipment at its site in Greenville, NC. The plans call for construction of a 126,000-sq-ft, large-scale oral-dose manufacturing facility, along with the repurposing of existing space to expand contract services.

Baxter International’s BioPharma Solutions business completed a 1800-square-meter capacity expansion designed for oncology drugs at the company’s fill/finish contract manufacturing facility in Halle (Westfalen), Germany, the company announced in November 2015. The facility includes innovative disinfection systems and an optimized layout to improve efficiency, prevent contamination, and keep potential losses on the filling line to a minimum. The ongoing development of the Halle facility is the latest in a series of expansions at Baxter, including the addition of a new packaging line in 2013.

Ajinomoto Althea is expanding its existing biological drug product manufacturing operations to include highly active materials, such as antibody-drug conjugates (ADCs), the company announced in October 2015. The new facility will include areas dedicated to bioconjugation, formulation, purification, quality control, and aseptic fill/finish, including lyophilization.

In March 2015, WuXi PharmaTech announced plans to build a 145,000-square-foot cGMP facility in Philadelphia, PA for the manufacture of cell therapy products that contain viral vectors. The company also announced in April 2015 construction on a $150 million biologics manufacturing facility in Wuxi City, China. When complete in January 2017, the facility will house 14 2000-L disposable bioreactors for fed-batch cell culture and two 1000-L bioreactors for perfusion runs. The facility will also be built to run continuous or semi-continuous manufacturing processes in addition to traditional fed-batch and perfusion modes.

Reference
1. S. Haigney, Pharmaceutical Technology 40 (1).

Article DetailsPharmaceutical Technology
Vol. 40, No. 2
Pages: 34–36

Citation:
When referring to this article, please cite it as R. Peters, “Under New Ownership: Consolidation Reshapes Contract Services Market," Pharmaceutical Technology Partnerships in Outsourcing Supplement 2016.