- Thermo Fisher Scientific said this week it will invest $150 million in its pharma services business, aiming to boost its capacity for product development and commercial manufacturing.
- The money will expand three sites, two in Italy and one in Greenville, North Carolina, in response to customer requests for aseptic filling lines and isolator technology, the company said Monday. Thermo executives expect construction to complete within two years.
- "These investments will help expand our global sterile manufacturing network and meet the increasing demand from customers that rely on our biologics development and manufacturing expertise," said Michel Lagarde, president of Thermo's pharma services business.
Thermo's business touches a wide swath of the life sciences industry and posted $24 billion in revenue last year.
Its four main units are life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and services. The pharma services business falls within the laboratory products and services unit, which was the best performing unit last year out of the four by revenue, earning just more than $10 billion.
CEO Marc Casper said on Thermo's last earnings call that its 2017 purchase of contract development and manufacturing organization Patheon for more than $7 billion has gone smoothly, with the unit now integrated into the larger company.
Thermo executives zeroed in on the CDMO space as a particularly lucrative one, and have followed that up with a $100 million investment last year and, now, another $150 million this year.
Speaking at an investor presentation earlier this month, Casper said he sees the pharma and biotech industries as particularly ripe for continued growth.
"When I look at the dynamics in that business, we think it's truly the golden age for the CDMO space," he said
Casper cited two primary factors to support that conclusion. First, more than 75% of all experimental molecules are in smaller biotechs that lack manufacturing capability, he said. Additionally, these biotechs are going later into the development process without selling, leading them to stay with a CDMO for commercial purposes as well.
Secondly, the chief executive said leading pharmas "have manufacturing networks that are mismatched with their demand," causing them to work with CDMOs — including Thermo.
When asked whether internal investments or outside dealmaking were priorities, Casper noted a preference for the former.
"The greatest return within reason is leveraging your existing network by basically filling up the buildings, adding marginal capital to really drive capacity," Casper said.