2024 Made Us Nervous. Will 2025 Be A Happier New Year?

By Louis Garguilo, Chief Editor, Outsourced Pharma

I don’t recall a time of more collective concern over development and manufacturing outsourcing than exhibited during last year’s news of Novo Holdings’ purchase of Catalent, and the sale of certain Catalent facilities to Novo Nordisk.

That angst was aggravated by the simultaneous drama known as the BIOSECURE Act, and its potential outcomes for WuXi Apptec’s operations.

Combined, those early 2024 events set us on edge most of the year.

Let’s hope for less edge-setting as we barrel into 2025.

Still Serving Customers Globally

Interesting enough, some salve is being applied by more recent news from both Catalent and WuXi Apptec.

Towards the end of last year, Catalent’s President and Chief Executive Officer, Alessandro Maselli, published an “Open Letter to Customers Regarding Pending Acquisition by Novo Holdings,” which began with his desire to:

 “… correct a few key inaccuracies that have been reported in the press regarding Novo Holdings’ pending acquisition of Catalent and reiterate that we are, and will continue to be, driven by our mission to develop, manufacture and supply products … under Novo Holdings’ ownership, Catalent will continue to operate as a leading global, independent, full-service CDMO.”

Lest anyone forget, he notes, after Novo Nordisk took over three major facilities as part of this transaction, Catalent still operates “nearly 50 global sites.”

Maselli then adds, “I will continue to lead Catalent as President and CEO following the transaction close,” and he looks forward to “partnering with all of our employees and Novo Holdings in this next chapter.”

In other words, all you sponsors out there, don’t fret: there’s still plenty of capacity, site diversity, ongoing commitment, and stable leadeship.

Separately, in one of the most anticpated CDMO earnings report ever, also towards the end of last year, WuXi Apptec reported “[d]emand from customers across regions continued to grow. In the first three quarters of 2024, we added over 800 new customers while maintaining the existing base of over 6,000 active customers.”

This certainly seems to fly in the face of our worst concerns related to the BIOSECURE Act.  

From Dr. Ge Li, Chairman and CEO of WuXi AppTec:

"Despite external challenges, we delivered a steady quarter-over-quarter increase in revenue and profit as expected for the first three quarters of 2024. The third quarter revenue returned to over RMB10 billion, growing 14.6% year-over-year excluding COVID-19 commercial projects. Meanwhile, our backlog reached RMB43.8 billion, growing 35.2% year-over-year. 

“WuXi AppTec remains committed to providing exceptional service to our customers and helping patients worldwide.”

The relative stability (or any changes) for both Catalent and WuXi, “despite external challenges,” as LI put it in the earnings release, will be a combined component of how 2025 turns out for our outsourcing nerves.

Background Conditions To 2025

Turning to a broader discussion of the coming year, Bikash Chatterjee, President and Chief Science Officer, Pharmatech Associates (a USP company), and an Outsourced Pharma Board member, mentions two industry conditions to keep in mind as we enter the New Year.

• Biotech IPO’s were up for the second time in Q3 2024. Perhaps this indicates the investor risk premium is improving.
  • While valuations have not markedly moved since interest rate cuts, the return of IPOs bodes well for all biotech companies struggling to lengthen their financial runway.
• We see an uptick in cell and gene threapy (CGT)-CDMO engagement.
  • Not long ago, “areas of CDMO’s were ghost towns as programs slowed down,” says Chatterjee, “but several we are working with are now booked for the next three quarters. The industry is getting back to business.”

With the above as background, Chatterjee moves to his Top 5 Challenges (slightly edited).

1. Widespread Adoption Of AI/ML

Fundamentally, any place there is a repetitive task, machine learning (ML) will begin to do it faster and more reliably.

ML and VR (virtual reality) are being applied broadly in both small and large molecule manufacturing. In Quality, we see applications for critical QMS elements such as Deviations and Compliance monitoring.

Predictive maintenance was a first industry-benefiting application for AI/ML.

In Operations, we see financial applications automating month-end close and quarterly reporting. Most importantly, we note a hyper accelerated evolution of tools and approaches applied to improve and advance these applications.

CDMOs will have to evolve more robust data-management strategies for their customers to incorporate AI/ML and other new technologies for the benefit of sponsors.

Advancing programs quickly is more essential than ever. Drug sponsors want access to their data faster, something CDMOs are often accused of as not being very good at.

Look for the most advanced CDMO’s to understand the “data as a product” paradigm shift, and invest in creating controls and infrastructure to provide these services

2. The ABCs Of ADCs (And ASOs)

The development of antibody-drug conjugates (ADCs), which combine monoclonal antibodies (mAbs) with cytotoxic drugs to treat cancer, and peptide-conjugated antisense oligonucleotides (ASOs), a therapeutic approach to improve delivery and cellular uptake, and other peptide drug modalities which make up complex generics and new advanced therapies, will accelerate.

“We see significant investment in Asia to build facilities and capabilities for the U.S. market," comments Chatterjee.

However, the challenge is for them "to overcome their legacy of sloppy QA as they step into HPAPI’s and cytotoxic manufacturing on a routine basis.”

3. Always About The FDA

The FDA’s latest guidance on biosimilars is a game changer, eliminating the “interchangeable designation,” thereby simplifying market entry. Historically, biosimilars were non-interchangeable unless they included rigorous “switching studies.”

Depending on state pharmacy laws, interchangeable biosimilars could be substituted for the reference product at the pharmacy without the intervention of the prescribing health care profession – this is how generic drugs are routinely substituted for brand-name drugs.

This change will greatly reduce the time, cost, and complexity of biosimilar applications.

Likewise, the FDA’s latest guidance on API DMF’s is of interest, and speaks to the supply-chain challenges the generics world is trying to address … because of the BIOSECURE Act.

So it's good we start the year less nervous. But we need to keep a sharp eye on what's to come. Welcome Outsourced Pharma readers, to 2025.