AGlobalData analysis found that the total number of deals involving contract manufacturing organisations (CMO) peaked in 2021, but has declined considerably since then.

In GlobalData’s “M&A in the Pharmaceutical Contract Manufacturing Industry” webinar, PharmSource editor Fiona Barry highlighted a drop-off in the volume of contract manufacturing mergers and acquisitions (M&As) in 2023 so far but remained optimistic that more activity would happen in the near future.

A GlobalData analysis found that from 2021 to 2022, active pharmaceutical ingredient (API) manufacturers made up 45% of acquisition targets, involving both small molecule and biologic. In the last five years, Thermo Fisher Scientific’s $20.9bn acquisition of pharmaceutical clinical research organisation PPD ranked the highest in value. Barry also identified Cambrex Corp, Catalent, Charles River Laboratories and Recipharm, as the most active CMO acquirers. However, Barry reported that since late 2022, M&As in pharmaceutical manufacturing have steadily dropped off.

“The amount we saw was roughly similar to the second half of last year, but it’s about half of what we saw in the first half of last year,” said Barry. She pointed to inflationary pressures and global recession as major contributing factors.

This week, the US Federal Reserve and the European Central Bank raised interest rates by a quarter percentage point. In addition, a 28 July, UK Government report found that the UK’s inflation rate has recently fallen to 7.9% in June 2023, its lowest number since March 2022. However, the Bank of England still predicts further rises in interest rates. The Bank of England’s Monetary Policy Committee (MPC) has increased interest rates at 13 consecutive meetings, rising from an all-time low of 0.1% in December 2021 to 5% in a June 2023 meeting. Similarly, US interest rates have reached the highest in 22 years with the most recent Federal Reserve actions to reduce inflation.

However, Barry predicted that changing trends could cause a shift in the downturn in dealmaking saying: “We are expecting dealmaking to accelerate.

“We are seeing a bit of a cooldown on wanting to get into debt. But really, it just remains the case that those largest CMOS with a bit more cash are going to want to keep on.”

Barry predicted that rising trends seen in cell and gene therapy manufacturing could mean that there will soon be more of a need for pharmaceutical manufacturers who specialise in viral vector production.

Reference：https://www.pharmaceutical-technology.com/news/inflationary-pressure-drop-contract-manufacturing-ma/