OUTSOURCING
Cambrex bucks the pharmaceutical service trend But the small-molecule stalwart may surprise with its next investment
velopment and are concerned about their downstream production options. According to Chief Executive Officer Steven M. Klosk, Cambrex is stretching RICK MULLIN, C&EN NEW YORK CITY out a bit after focusing narrowly on latestage, small-molecule pharmaceutical diversified services or a one-stop-shop chemicals for the past decade. The compahe world of pharmaceutical approach combining API and final-dosage ny had a biologics business but sold it to contract manufacturing has manufacturing. Lonza in 2007. been rocked by a number of But Cambrex’s latest investments are And Cambrex, one of the few publicly jarring deals of late. Thermo not a matter of simply doubling down on traded companies in the contract pharFisher Scientific’s acquisition of Pathesmall molecules. maceutical chemicals field, expects to on, valued at $7.2 billion, was a shock to In addition to adding preclinical and invest $70 million to $75 million in 2017 many industry watchers earlier this year. Phase I clinical trial capacity with the and is still on the lookout for acquisitions Lonza’s $5.5 billion purchase of CapsuNorth Carolina plant, Cambrex emto increase capacity and perhaps broaden gel also made a stir, as did the merger barked on an expansion in Charles City its offerings—even as far as bringing back of Cambridge Major Laboratories and biologics. AAIPharma Services to form Alcami. Even that includes a scale-up of high-potency API production capacity from 150 L to Yet Klosk, who became CEO in 2008 smaller acquisitions, including Catalent’s 4,000 L—a $24 million investment. The and previously ran the company’s biorecent purchase of cell culture specialist combined effect is a stronger pitch to pharma business, says he’s primarily inCook Pharmica for $950 million, made prospective drug industry customers that terested in further expanding Cambrex’s waves. have molecules in the early stages of desmall-molecule production. In all cases, the deals brought to light “Biopharmaceuticals are evolving business models in growing faster than small an industry that is consolimolecules—it’s a smaller mardating as its players diversify. Despite biologic drug encroachment, chemical-based therapies ket, but it’s growing faster,” Firms are adding new service continue to thrive. Klosk acknowledges. Still, he and manufacturing offerings is unmoved by estimates that to core businesses by combin- Small-molecule drug candidates the share of large-molecule ing final-dosage manufactur7,000 5-year compound biologic compounds in the ing with active pharmaceutiannual growth rate current drug development cal ingredient (API) producpipeline is approaching 50%. tion, say, or adding biologics 6,000 Launched “There is still a very large to a small-molecule services small-molecule market with a business. whole lot of potential growth,” Cambrex’s acquisition 5,000 Filed with FDA he says. of High Point, N.C.-based Klosk adds that the general PharmaCore last October was shift of contract API producworth noting for a different 4,000 Pre-FDA filing tion from Asia to Europe and reason. The $25 million deal the U.S. also puts Cambrex in gave Cambrex manufacturing a good position. The company, assets for small-molecule 3,000 Phase III which had sales of $492 milAPIs that are in the early lion in 2016, has facilities in phases of human clinical triKarlskoga, Sweden, where it als. The plan is for the new 2,000 Phase II produces intermediates and facility to feed the firm’s largAPIs, and in Paullo, Italy, er-scale API plant in Charles where it makes intermediates City, Iowa. 1,000 and APIs for brand-name and The news, followed by Phase I generic drugs. The firm has announcements in the en0 research sites in Tallinn, Estosuing months regarding ex2011 12 13 14 15 16 nia, and Wiesbaden, Germany. pansions at Charles City and Preclinical ◼ Preclinical ◼ Phase I ◼ Phase II ◼ Phase III “The Cambrex brand stands elsewhere, signaled that the ◼ Pre-FDA filing ◼ Filed with FDA ◼ Launched for something in terms of small-molecule stalwart is regulatory and quality excelsticking to its guns as many of Note: Figures are for new chemical entities in the drug development pipeline or currently on the market. lence,” Klosk says. “Managing its competitors veer toward Sources: Cambrex, Citeline
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Small molecules, big world
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C RE DI T: CAMBREX
contract can heavily impact a firm’s availability of manufacturing assets, and the lack of ready capacity could kill a major new contract. “Even with all the investment we’ve been doing, there have been capacity constraints at times,” he acknowledges. This dilemma is hardly unique to Cambrex, Klosk adds; the industry as a whole is suffering from capacity constraint. “There are cycles, and we have been on a very positive cycle. No doubt there will be a dip.” While many of the firm’s competitors claim that 2017 Cambrex CEO is a critical year for making Steven M. Klosk. investments, Klosk contends that getting it right is a matter of the kind of steady investment Cambrex has made. Beyond the current project in Charles City, the company recently launched a large-scale API plant in Karlskoga. The acquisition of PharmaCore and the expansion project under way significantly recalibrate the Charles City site, according to Joe Nettleton, Cambrex’s vice president of U.S. operations, who is based
in some of the areas outside the U.S. and Europe, where we have a lot of experience, comes with risk.” And there are enough risks operating in the West, he says. Growth in small molecules is such that the firm is having a hard time keeping up with demand, even after investing about $200 million over the past five years. “You never quite get it right,” Klosk says, noting that it is just as easy to overinvest as it is to underinvest in contract manufacturing capacity. One
“If they bought a dosage facility, I’d be shocked.” —James Bruno, president, Chemical & Pharmaceutical Solutions at the plant. “Purchasing PharmaCore allows us to go back to preclinical and increases our analytical bandwidth. There are 30 chemists down there,” he says, referring to the North Carolina plant. “So we have a lot more chemists available to do the analytical and chemical development work.” The new high-potency technology coming to the Charles City plant will expand Cambrex’s production capabilities to what Nettleton calls the medium range in terms of scale. High-potency capacity is a key to growth in small molecules, he says, given the number of potential customers, including start-ups, with oncology drugs in development. “Folks expect it. It kind of gets you a ticket to the dance,” he says. James Bruno, president of the consulting firm Chemical & Pharmaceutical Solutions, says Cambrex’s small-molecule
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“I’d be shocked.” The technology focus is a savvy approach to the and business of final-dose manpharmaceutical services market. ufacturing is fundamentally difIt’s a strategy that is paying off, ferent from producing the drug especially given the company’s active, he says. recent moves, he says. Klosk avows that Cambrex is “The good thing is that they open to adding either biologics have focused,” says Bruno, who or dosage services in a near-fuis skeptical of the one-stop-shop ture acquisition, with a greater approach. “They have not diluted likelihood that it would be a dostheir efforts with things such age facility. Large pharmaceutical as working on particle size or companies are investing in their engineering of salts. They’re not own biologics capacity, he says, looking at 50 different things.” adding that Cambrex is no longer While the industry trend has involved in manufacturing techbeen toward diversifying, Camnologies that are wholly different brex is locking in on the original from chemical production. pharmaceutical service market Nettleton says high-potency technology is a “ticket to the “It would be a very significant and one that is still growing: dance” in small-molecule contract manufacturing. investment, and we don’t have small-molecule APIs. the knowledge anymore since we Cambrex has a number of large con“There are a ton of small molsold the biologics business,” he says. tracts, Bruno notes, notably with Gilead ecules out there, and Cambrex is starting Still, it is most likely that Cambrex Sciences, that have allowed it to expand. to capitalize on that, on their ability to He speculates that the firm may fall in line will continue to invest in small-molecule do smaller quantities, and on their being with the competition and find an opportu- API production, Klosk acknowledges. “I a Western manufacturer,” Bruno says. “It don’t feel an obligation or a need to do an nity outside its small-molecule box. points to them being in the right place at acquisition in what I’m calling tangential “If they were to buy a stand-alone fathe right time.” services,” he says, “meaning we feel good cility, even in biologics, I wouldn’t be in He adds that while pipelines are filling about the small-molecule API business. the least surprised,” he says. Biologics are with large-molecule drug candidates, onWe need more capacity, and the market APIs and would be an extension of Camcology drugs are a major drug-industry brex’s core business of API production. “If is strong. It makes sense for us to look to focus, and many of them are based on they bought a dosage facility,” Bruno adds, grow in small-molecule APIs.” ◾ high-potency small molecules.
