Mallinckrodt looks to grow CMO business to offset opioid headwind

By Nick Taylor

- Last updated on GMT

(Image: Getty/Hywards)
(Image: Getty/Hywards)

Related tags Mallinckrodt CMO Opioid Opioid epidemic

Mallinckrodt talks up prospect of contract manufacturing growth offsetting opioid headwind faced by its speciality generics business.

US opioid litigation has overshadowed Mallinckrodt’s performance in recent quarters, contributing to a more than 80% drop in its stock price over the course of 2019 and leading it to suspend plans​ to spin off its specialty generics business

Opioid products account for around one-third of the speciality generics business, suggesting a fall in sales of the painkillers could create a significant headwind for the unit. Yet, Mallinckrodt’s generics business has grown in recent quarters and management thinks it will continue to expand in the long-term.

To explain his confidence in the long-term prospects of the business, Mallinckrodt CEO Mark Trudeau pointed to the potential for it to take on more outsourced manufacturing work.

Trudeau said, “This is a manufacturing business at its core. We currently do contract manufacturing and we believe there are opportunities to expand that business over time​.”

Mallinckrodt gained a dedicated contract manufacturing unit, BioVectra, through its 2014 takeover of Questcor Pharmaceuticals. However, Mallinckrodt stuck a deal to sell BioVectra in September​.

The deal, which is due to close in the fourth quarter, will see private equity group H.I.G. Capital pay $135m (€122m) upfront to acquire BioVectra, which operates out of several facilities in Prince Edward Island and Nova Scotia, Canada.

Mallinckrodt agreed to sell BioVectra despite seeing long-term growth potential in the business. The incorporation of $75m in milestones into the sale will allow Mallinckrodt to benefit if BioVectra lives up to that potential but Trudeau’s comments about the specialty generics business suggest the company also wants to profit from demand for outsourced manufacturing more directly.

The top five contract development and manufacturing organisations (CDMOs) are expected​ to grow at up to 6.5% per annum over the coming years, further expanding a market valued at $92.3bn in 2017.

Those leading organisations account for around 15% of the market, meaning there is a long tail of smaller CDMOs that comprise most of the industry.

Mallinckrodt wants its speciality generics unit to be one of the smaller players that captures rising demand for outsourced manufacturing. However, with Mallinckrodt still wanting to spin off the unit in the belief that separating its businesses will maximise their value, the current parent organisation may not be the one to reap the hoped-for benefits of expanding the service operation.

Related news

Show more

Related products

show more

Pulmonary Delivery of Orally Inhaled Therapeutics

Pulmonary Delivery of Orally Inhaled Therapeutics

Content provided by Catalent Pharma Solutions | 19-Oct-2023 | Product Brochure

New classes and indications of orally inhaled therapeutics are rapidly expanding, with the development pipeline increasingly featuring both large and small...

Addressing Challenges with Clinical In-Use Testing

Addressing Challenges with Clinical In-Use Testing

Content provided by Lonza | 12-Oct-2023 | White Paper

Lonza Drug Product expert Léa Sorret PhD explores Clinical In-Use Testing of Biotherapeutics in this white paper. Léa shares her expertise and describes...

Manufacturing Drugs with Highly Potent APIs

Manufacturing Drugs with Highly Potent APIs

Content provided by Altasciences | 28-Sep-2023 | White Paper

In this issue of The Altascientist, we examine the critical considerations for the safe and compliant manufacture of drugs with highly potent APIs (HPAPIs),...

Related suppliers

Follow us

Webinars

Headlines