Contract Services

Keeping ahead in the CDMO arena

By Frederic Desdouits, Managing Director, CDMO at Novacap

The contract development and manufacturing organization (CDMO) sector is booming, but how can companies keep ahead in the ga

The contract development and manufacturing organization (CDMO) sector is booming, but how can companies keep ahead in the game and ensure they continue to offer a competitive, value-added service to their customers? Frederic Desdouits, Managing Director, CDMO at Novacap provides valuable insights.
The past 40 years has seen a dramatic rise for the CDMO sector. From humble beginnings in the 1970s, the past 15 years in particular has seen massive growth. Affluent western markets, and developing countries, have all seen greater healthcare spending and an ever-growing demand for pharmaceutical products. As pharmaceutical companies seek to optimize costs and focus on core capabilities, CDMOs have become an integrated part of the industry. But competition can be fierce.
Chemicals Knowledge spoke to Frederic Desdouits, Managing Director CDMO at Novacap about current opportunities in the CDMO market, trends for the future, and the importance of providing a competitive, value-added service.
How can CDMOs differentiate themselves in an increasingly crowded industry sector?
A primary goal must be to serve your customers to the best of your ability. This can be achieved by providing a best-in-class industrial network (e.g. with cGMP and non-GMP facilities across different continents), or offering critical mass production sites that combine sufficient scale and entrepreneurial spirit. On top of this, providing additional services such as centralized research, providing the latest technologies, and being flexible and easy to work with can be important differentiating factors.
I also think it’s important to consider the fact that business collaborations are becoming more and more service oriented, hence every link in the chain needs to integrate upstream and downstream considerations.
Keeping up with the newest technologies must be an ongoing challenge. Is this a driving force behind the rise in mergers and acquisitions in this sector?
Absolutely! We reinvest a large part of our profits in maintaining and improving our industrial capabilities. Nevertheless, we cannot invest in all directions internally and can certainly not follow all the innovation trends. M&A offers a way to invest our cashflow in teams, technologies and client portfolios that would have been impossible to build on our own.
I suppose that as an example of this, Novacap recently acquired PCI Synthesis. How did this enhance your service offerings to the pharmaceutical industry?
PCI Synthesis is a great company with a very strong team build around Ed Price, CEO and founder. They have rooted their business in the Bostonian emerging companies network. Their track record of successes, quality of services and economic performance is very impressive. This is our first acquisition in the US market and it will change us, for good. With PCI, we will offer our clients a US-based cGMP manufacturing alternative. PCI is also bringing a profound understanding of business needs from emerging companies that we add already experienced but not to the same extent. Likewise, PCI will now benefit from the global industrial capabilities of Novacap and provide more services to its clients. Novacap now brings together the best of the experience of several players of this industry – PCI Synthesis in Boston, Uetikon in Germany, and PCAS in France and Finland.
As well as providing latest technologies, CDMOs need to be flexible and easy to work with. How can this be achieved? 
This is the most difficult part of our business and the most exciting one, too. People working in this industry stay because they enjoy the needed agility to serve clients interests. Most of the time, our clients need our help to solve chemical pathways and/or industrialization challenges. Shouldering clients in this context is a difficult but very rewarding effort. To get there, our people, in R&D and in manufacturing plants, always listen to clients’ requests and are committed to do the extra effort to solve the issues as fast as they can. Transparency is also an important pillar of our success and flexibility. When you don’t hide, you progress.
What do you think will be the main opportunities for CDMOs over the next 5 years?
Drug consumption and outsourcing are the pedestals of our industry. I do not see these trends reversing in the mid-term. However, we have enjoyed a strong growth with emerging companies and early clinical phase products over the last years. This is strongly dependent upon the financing of innovation that, we all know, is cyclical. Hence, we must be careful of the end of the current cycle. To finish on a positive note, we also see a regain of interest from clients not to focus only on lowering costs but also on service proximity and quality, in this context our European and American assets are very well positioned.
Interview with:
Frederic Desdouits, Managing Director CDMO at Novacap, 21 Chemin de la Sauvegarde, 69134 Ecully Cedex, France.
T: +33 (0)4 26 99 18 00