cphi north america 2021
Report: expect the future of US pharma market to be ‘exciting’
The COVID-19 pandemic has certainly had a tremendous impact on the pharmaceutical business. How this impact will affect the industry in the coming month will be a point of discussion during the upcoming CPhI North America hybrid event (taking place online and in Philadelphia August 10-12).
The topic also takes center stage in the recent report “US Pharma Market 2022 and Beyond,” issued by CPhI North America producer Informa Markets. Anthony Pombal, brand director for Informa Markets, shared highlights from the report, including what the experts and industry data cited in the document might mean for the future.
OSP: Could you please share how the pandemic has challenged the pharma market—what sectors/aspects have been impacted the most, and in what ways?
AP: Of all the challenges during the pandemic, perhaps two stand out in pharma.
First, the difficulties in supply chains were a major area of concern for the pharma industry initially as it had to adapt to new ways of working; however, later in the pandemic as we progressed, we have seen the difficulty in meeting suppliers and, in particular, new partners. It’s also why we adopted hybrid events and why, as economies open, we expect to see a big demand for events again.
The other interesting aspect of the supply side and partnering challenges is that, at the same time, because we are an industry that serves healthcare, we have seen an extremely buoyant industry and innovation area. This has further accentuated the need over the next 12 months for opportunities to meet partners.
OSP: Similarly, please share some of the ways COVID-19 has created opportunity—and again, what sectors have seen some of the most notable effects?
AP: For pharma industry growth and, particularly the industry in the US as our report shows, it has been a very positive time as capital inflows increase at the same time as we see a renewed R&D pipeline.
For our exhibitors, many of which provide ingredients or contract services to pharma companies, there is strong demand in the US as the industry looks for alternative sourcing strategies, but also biotechs need to access increased CDMOs services to enable them to expedite time to market. This, coupled with such strong growth in the US and demand for repatriated manufacturing in some cases, means we are seeing very strong potential for the short- and medium-term for all companies that target sales in the US market.
OSP: You remark upon the overall adaptability of the market in the face of all this adversity. Could you please comment on some of the most notable examples of this adaptability?
AP: What the industry has achieved in adapting to a remote monitoring environment and secure global supply chains in the last 18 months is a great testament to the robustness of supply chains and contingencies already established. But what we have also seen is planning earlier for supply partners, often using remote events like CPhI to prequalify leads, with the goal of firming these up in person as events open – which is tremendous news for the industry attending CPhI North America.
OSP: One of the report contributors, Bikash Chatterjee, remarked that the upcoming decade very well could be “the most exciting 10 years of our lives.” Please elaborate on how the next 10 years might look, and what’s likely to contribute to this rosy stretch.
AP: Without wishing to speak for him, I think it just goes to show the optimism there is in the industry for growth – which is the culmination of several trends. Undoubtedly for our exhibitors, however, one thing his thoughts do show is that outsourcing will only quicken as a result of the pandemic – with externalization strategies an integral part of every company’s manufacturing approach.
We would anticipate outsourcing to grow not only in line with the market but above this rate as well. Not only have we seen growth in outsourcing, but we’ve seen growth across all sectors and CPhI sub-events especially in excipients, machinery, packaging, and ingredients.
OSP: The word “collaboration” shows up in your report—could you please share how this has popped up in recent years, and how industry partnerships might look in the period you’re forecasting?
AP: The industry was tasked with a global challenge of unprecedented scale and was provided with funding and accelerated approvals – it led understandably to the creation of a partnering environment we have not seen before – as the best way to overcome the challenges we had was to work together as an industry. The exciting thing now is that we know it works and there are ways to innovate faster, so the hope is this partnering and accelerated pathways can continue in a potentially post-COVID environment.
Certainly, we have seen a strengthening of supply and development partnerships, and the industry will look for tighter and alternative partnering networks in the medium term to both increased development speed and ensure continued resilience in supply chains. What this does mean, however, with a strong pipeline and demand, is that we are seeing the need to start planning much earlier – and we expect the CPhI community to be in high demand as competition for partners intensifies.
OSP: What about acquisitions—will the increase in M&A activity we’ve seen in recent years continue?
AP: With record levels of capital coming into the industry from public sources for activities related to the pandemic and private sources via VCs and new market entrants, we are seeing a flurry of M&A activity. In fact, we’ve seen very large valuations for early-stage pre-clinical companies but also CDMOs as a result of the increase in demand for capacity, with our report highlighting EBITAs of over 20x in some cases.
The pandemic has also led to a rise in demand for fill-finish vaccines, adjuvants and viral vector capacity and I fully expect more building and buying of facilities to keep up with the rise in demand.
OSP: Your report also discusses “innovation hubs”—where might we see the most activity, and how will these change from recent years?
AP: We’ve seen new innovation hubs pop up globally but also domestically here in the US, be that Los Angeles, Texas, or Chicago. To take one example CPhI North America host city Philadelphia, one of the US’s traditional big four along with San Diego, San Francisco, and Boston, is poised to become the world’s leading cell and gene therapy manufacturing hub. In fact, our experts anticipate that demand will outstrip supply by 5:1 in Philadelphia. The pandemic has stimulated more collaborative approaches and open innovation, creating a really positive environment we’ve never seen before in pharma.
The hybrid CPhI North America event takes place August 10-12 online and in Philadelphia. For more information or to register, visit the CPhI website at CPhI.com.