October 2, 2018 PAP-Q3-18-CL-009
I am honored to have taken over the role of Chief Executive Officer at Cenexi from our founder, Philippe Mougin. We are very fortunate that Philippe is still deeply involved in strategic matters in his role as Chairman of our Board of Directors, as Cenexi will continue to benefit from his tremendous experience and leadership. My role has been to continue implementing and extending Philippe’s strategies and to strive to make Cenexi more outstanding every day.
Having trained as a chemist, I previously worked mostly in medium-to-large companies in a variety of manufacturing industries, including 15 years in aerospace and stints in the automotive and chemical industries. Having entered the pharmaceutical industry and stepping into the role of CEO, I am leveraging my 30 years of experience in these diverse fields to contribute to the further development of Cenexi.
I was motivated to join Cenexi because of its positioning within what I perceive to be a market of great opportunity due to the transformation of the pharma industry. A major driving force in the industry is the trend toward further outsourcing of services and operations, which has created a robust contract development and manufacturing organization (CDMO) market. While the pharmaceutical industry continues to grow by about 4% annually, the subcontracting segment is experiencing even more rapid growth of 6–7%; this appears to be a long-term trend. However, increasingly stringent regulations continue to force all players in the industry to continuously improve performance.
Cenexi has a distinctive positioning and a strong reputation within the industry. We made a very conscious choice to seek a unique position, with a large part of our portfolio comprising sterile injectable products — which reflect more than 60% of our turnover — and value-added complex products.
Now that we have reached a certain scale, with four manufacturing locations, 1300+ employees and around €200 million in sales, we are transitioning into a new phase at Cenexi wherein we are seeking to significantly improve our processes, providing our customers with even greater reliability in terms of quality, supply and new capabilities. We have historically been a strong ampoule player, but we are currently investing in excess of €20 million in expanding our capacity for prefilled syringes and vials, enabling us to offer customers the full range of sterile injectable products and preparing ourselves for the new sterile GMP Annex 1 regulation.
Cenexi actively seeks customers who are looking to establish long-term strategic partnerships. Such partnerships, rather than transactional supplier–customer relationships, have been a major factor in our success to date. We have partnered with companies ranging from very large multinationals to very small startup companies and can adapt to both types of organizations, understanding the greater demands that come from larger organizations and the greater risks associated with startups.
Companies engaging a CDMO like Cenexi are typically looking for a low-maintenance partner who can be completely reliable in terms of quality and supply, both for day-to-day delivery of commercial products and for development programs. It is also critical that the contract organization has reached a certain critical size such that it has the financial means to invest with its partners to expand its capacity as the partners’ needs grow. At Cenexi, we constantly seek opportunities for improvement — in how we deliver our products, how we process orders, how we develop new products and how we communicate with our partners — we are always trying to find ways to make our relationships more effective and efficient.
In the near future, we think that more and more virtual pharma companies will be looking for extra services, expertise or capabilities from their outsourcing partners to manage many operations, from development to manufacturing and the supply chain. Our dedicated company Cenexi Services has been set up to answer these growing needs: both the transfer of commercial products as we gain new business and developmental support for precommercial products to help our partners bring them to market. We provide a one-stop shop for customers with development needs: product and analytical development, dedicated pilot GMP equipment for engineering and clinical batches, project management, etc. — a range of services we have found to be greatly appreciated.
We have the ability to support a project throughout its life cycle and meet a range of our partners’ needs — whether this means finding a new source of active ingredients or changing packaging or logistical support — and we are trying to be a proactive organization that is always looking for ways to enhance the support we offer our partners.
As I mentioned above, the most significant trend in the CDMO market overall is its very healthy growth, which is greater than that of the pharma industry as a whole. We also continue to see shifts in the players within the industry, from the large, fully integrated pharmaceutical companies that dominated in decades past to more medium-to-small pharma players. We also see a definite consolidation among CDMO players to reach the necessary critical size to become true strategic partners.
In the sterile injectables segment, the revised Annex 1 regulations for good manufacturing practice of sterile medicinal products is forcing pharma companies and CDMOs to step up their game. Cenexi has committed €20 million in investment in new lines to guarantee fully compliant Annex 1 production facilities for our customers, in addition to ongoing upgrades to our existing lines to make them compliant. We are committed to a proactive approach to evolving regulations so that we can stay ahead of the curve and remain a reliable partner.
We currently have four strategic goals to build upon: operational excellence, organic growth and acquisition, innovation and, last but not least, building an inspiring corporate vision and culture where employees can develop their full potential.
Our first goal is to continue to work toward profound operational excellence throughout Cenexi and in our partnerships. Customers demand higher levels of quality and supply performance in contract manufacturing, and we are currently enrolled in a deep transformation program at all four of our manufacturing sites focused on meeting these evolving needs.
At Cenexi, growth means both winning new contracts and expanding our capabilities and capacity to assist our customers in their goals. Cenexi has grown by about 13% annually for the last three years, with equal contributions from organic growth and acquisitions.
We plan to continue to grow the business through the acquisition of new manufacturing sites. In 2017, we acquired from MSD a site in Hérouville Saint-Clair, France. We have a tremendous investment program underway in this facility, adding new vial and ampoule lines, and we are continuing work on operational and cultural integration of this site into the broader Cenexi organization. Additionally, we are constantly evaluating further acquisitions to increase the number of manufacturing sites. We are engaged in a selective acquisition strategy: our goal is not to reach a certain turnover by a certain year; it is to constantly strengthen our strategy, which means acquiring high-value assets in sterile injectables or in sophisticated technologies. In addition, we are looking to expand our geographic footprint beyond Europe, particularly to strengthen our positioning in the United States, where many of our customers are located.
We are developing more service offerings, including development programs. We will continue to work with our strategic partners to better understand their current and future needs and add new capabilities and service offerings to meet their needs throughout the life cycle of their products.
Additionally, we will continue to selectively work on innovation programs with somewhat higher risk profiles, particularly in the field of innovative drug delivery systems like next-generation autoinjectors.
Finally, we are developing a global corporate vision. Typical of a company whose growth has been significantly fueled by acquisitions, we recognize that each of our sites currently has its own distinct culture. Ultimately, we want all of our employees to feel a deep sense of belonging at Cenexi and to share a common vision and set of values that will allow us to best serve our customers and partners. We recognize that our people will always be our most important asset.
In my view, the top three strengths that Cenexi offers our customers and strategic partners are our international reach, our deep and ongoing specialization in sterile injectables and our spirit of partnership.
As CEO, I am committed to driving increased operational excellence to achieve recognition in the market that we are one of the most reliable international players in the field, and I look forward to establishing my tenure at this best-in-class organization.
François Hincker joined Cenexi in mid-2017 and was appointed CEO in January 2018. Prior to joining Cenexi, he spent 10 years at Solvay, where he held the position of President of a Global Business Unit involved in plastics, mainly for automotive and electrical applications. Prior to that, he worked at Gates in the Fluid Power industry for five years and at Hexcel for 15 years in Advanced Composites for the Aerospace industry. Mr. Hincker graduated from the ENSCPB Chemistry and Physics Engineering School in Bordeaux, France, and he also holds an MBA.
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