Q: What Role has M&A Played in your Company’s Growth?

— Mergers & Acquisitions —

William D. Barbo
Corporate Executive Vice President & Chief Commercial Officer,
Charles River Laboratories

A: M&A has been a significant part of our growth strategy for a number of years. As an organization, we believe that growth is an integral part of being an industry leader. M&A provides us the opportunity to be more relevant to our customers — we don’t grow for the sake of growth, or to move into areas we don’t understand; we grow to strategically improve our portfolio. We’ve acquired more than 35 companies over the past 15 years, including six in the past three years alone. Each of those acquisitions has been the result of extensive due diligence, both into the companies we look at acquiring, and into our own to determine what areas make the most sense to grow.

Mike Grippo
Vice President of Corporate Development, Catalent Pharma Solutions

A: For Catalent, acquisitions have been transformative for the growth and diversification of the company’s technologies and services offering, and in the last fifteen months alone Catalent has made three significant acquisitions in distinct parts of its business, to address different strategic business needs.

The most recent acquisition of Cook Pharmica, completed in October 2017 for
950 million dollars, strengthened Catalent’s growing presence in biologic-based drug development. When integrated, Catalent’s offering in biologics will cover development and analytical services, manufacturing and finished product supply, and of course its manufacturing capabilities and technology portfolio of GPEx® cell-line expression at its Madison, Wisconsin facility and SMARTag® antibody-drug conjugate development in Emeryville, California.

Early in 2017, Catalent acquired Accucaps, bolstering its OTC and prescription pharmaceutical softgel capabilities and manufacturing capacity in North America. This increased Catalent’s portfolio of products supplied to pharmaceutical companies as well as adding two state-of-the-art facilities offering integrated softgel development, manufacturing and packaging into its global network.

The addition of Pharmatek Laboratories in 2016 expanded Catalent’s early-phase drug development capabilities and added spray drying technology to the company’s portfolio of drug formulation and delivery technologies aimed at overcoming solubility and bioavailability issues. Additionally, the San Diego facility gives Catalent a geographical presence on the US West Coast. 

Mark Rogers
Global Technical Director, SGS Life Sciences

A: Between 1993 and 2015, drug companies spent an estimated $1.7 trillion on M&A activity, with 74% of this activity attributed to only 20 companies. 2014 alone saw 185 deals, of which 22 were valued at more than $1 billion. This trend continues today with nearly $34 billion being spent on M&A in the first quarter of 2017, and is likely to continue and perhaps even escalate. In particular, the political climate in the USA, advocating lower corporate tax rates and supporting repatriation of overseas revenue, may provide pharmaceutical companies even more incentive to pursue acquisitions to augment their growth. This trend in M&A has been primarily driven by a need to compensate for reductions in growth as a result of investment in early phase pipeline development, aptly demonstrated by the very recent, $11.9 billion acquisition of Kite Pharmaceuticals by Gilead. 

Interestingly, the CRO/CMO service industry has also undergone a similar trend with increasing M&A activity. For example, the estimated global deal value in 2015 is estimated at $12 billion. A major driver for this comes from increased competition as a result of active outsourcing partner consolidation by the pharmaceutical industry, to ensure better efficiency and consistency, particularly following acquisition. Larger service providers such as SGS have been able to take advantage of such strategy by providing a full range of analytical services across the globe. M&A in the CRO/CMO sector has been sought primarily to improve the global footprint, acquire higher levels of technology and provide a broader portfolio of services. There seems to be little evidence that M&A in the pharmaceutical industry has resulted in any significant loss of business, particularly for the larger CRO/CMO providers, but rather has been grounds for scope change and perhaps some downsizing. Despite the magnitude of the M&A activities, the fundamental and primary demands on the pharmaceutical industries’ outsourcing partners for quality and on-time delivery will continue to dominate, regardless of the size or activity of the pharmaceutical business.

Mike Cannarsa, Ph.D.
US Business Development Director, Almac Sciences 

A: Almac Sciences, a business unit within the Almac Group, has grown organically since 2004 with a very respectable growth of more than 20% per year over 10 successive years. Recently, Almac Sciences has made some well-targeted acquisitions, with the first being completed in November 2015 of Arran Chemical Company located in Athlone, Ireland. This focused on combining our strength, scale and technology. The impact on our business has been tremendous; the perfect combination of large-scale intermediates manufacture (Arran asset) and biocatalysis (Almac technology platform) has successfully given us the right route-to-market for many of our clients’ development projects.

The second acquisition, again in Athlone, Ireland, was completed on November 1st, 2017 and builds on our complementarity and extended resource services. Though too early to discuss impacts on long-term business, we can already say that this is broadening our service offerings and addressing our global clients’ growing demands for high-quality, integrated, efficient offerings.

Mark Quick
Executive Vice President, Corporate Development, Recipharm 

A: Recipharm has a clear merger and acquisition (M&A) strategy which is focused on expanding our capabilities as a full service CDMO, as well as our geographic presence. 

In recent years we have established a strategic presence in both the emerging Indian market and the innovative US market. Our geographic footprint is now unique in the CDMO industry, and allows us to offer a local-level service to our customers. In addition, by bolstering our development and manufacturing expertise through our M&A activity, we are able to handle complexity for our customers, helping to simplify the supply chain by taking products from proof of concept to commercial reality.


Nice Insight

Nice Insight, established in 2010, is the research division of That’s Nice, A Science Agency, providing data and analysis from proprietary annual surveys, custom primary qualitative and quantitative research as well as extensive secondary research. Current annual surveys include The Nice Insight Contract Development & Manufacturing (CDMO/CMO), Survey The Nice Insight Contract Research - Preclinical and Clinical (CRO) Survey, The Nice Insight Pharmaceutical Equipment Survey, and The Nice Insight Pharmaceutical Excipients Survey.