Brian Scanlan: Pharma ChemOutsourcing Panels 2022

Private Equity Investment in CDMOs Panel

PE Brings More than Financial Resources: Today’s PE firms must bring a myriad of resources and expertise to ensure foundational gaps can be filled and overall success of the partnership is achieved. These resources can include commercial, operational, benefits, legal, strategic planning, and financial.
Do Your Homework on Culture: Ensure there is culture fit with PE; critically important to success of the partnership.
Growth Equity vs Full Buyout. Is There a Right Answer?: Two of the pharma service companies on the panel (Ascendia and GL Chemtec (an Edgewater portfolio company)) discussed their experiences with private equity. One partnered with a growth equity partner (minority investment), the other a traditional PE buyout partner (majority investor). Many factors were discussed, but the consensus was that this is a case-by-case situation. Culture fit was key here as well.
PE-Facilitated Integration Works: BioDuro-Sundia discussed how with help of their PE partner, they have successfully become a full-service provider in drug discovery, development, and manufacturing. Their leverage/cross-selling opportunities were impressive.

Lockdowns Did Not Always Equate to Shutdowns: Several China-based companies discussed how some operations continued during the lockdowns, with employees sleeping at the facilities. A true testament to the entrepreneurial spirit.
Just-In-Time is Out-The-Door: Inventory management is critical going forward. Companies are reconsidering inventory levels of both raw materials and finished goods. Diversification of supply chains [within China] is happening.
Advances in EHS within China are Real: Especially considering the shutdown of thousands of older pharma chemical plants, and subsequent building of massive new infrastructure with a focus on safety systems. These are on par, or better, than other plants around the world.
Re-Shoring is Happening, but How Far Will It Go?: Consensus of the panel was that China and the US are too big and co-dependent for any abrupt redirection of supply chains. In a post-covid world, geopolitics takes front and center on drivers of re-shoring tendencies.