Thermo Fisher's pharma head talks Brammer Bio and future M&A
Thermo Fisher Scientific is jumping into gene therapy. With drugmakers big and small increasingly entering the space, the Waltham, Massachusetts-based corporation announced a $1.7 billion manufacturing buyout of Brammer Bio, a contract manufacturer of viral vectors.
Thermo Fisher's president of pharma services Michel Lagarde knows a thing or two about being acquired by the life sciences giant. In 2017, Lagarde was Patheon's chief operation officer when his now current employer bought the CDMO for more than $7 billion, leading him into the executive ranks of Thermo Fisher.
In the past year and a half, Lagarde has grown Thermo Fisher's CDMO ambitions. But the Brammer deal propels the company into gene therapy manufacturing as well as all the inherent challenges of producing the complex treatments. Lagarde discussed these and explained why now was the right time for Thermo Fisher in an interview with BioPharma Dive earlier this week.
The following interview was lightly edited and condensed for clarity.
BIOPHARMA DIVE: When do you think we'll start seeing — if we haven't already — R&D activity around gene therapy translate into serious manufacturing requirements and challenges?
LAGARDE:That question informed our decision to enter this segment now. If you think about manufacturing services in the gene therapy space, it has grown to be about a billion dollar market today and has grown very fast, north of 25% a year.
As more and more of these therapies get in later stages of development or get approved, the requirements around manufacturing significantly go up — both in the required quantities but also in the required reliability of the supply chain.
We thought this was a good moment to step in and we looked around for what companies can provide us with this capability. We felt that Brammer, as the leader in the space, was the best opportunity for us to take a really good platform and under our ownership lead it to the next level.
Is there anything that tempers your enthusiasm on this gene therapy boom? What would slow or complicate it from being fully realized?
LAGARDE:There's a couple of things. One, as we know in drug development, success rates are not 100%. It's a tough scientific challenge and, particularly if you look into some of the diseases that gene therapies try to cure, they're complicated.
There's always the element of: Will the projects that customers start ultimately lead to commercial product? Which is why we think these services should be provided by people like us at scale. That way, we're not tied to the individual success of a specific customer but rather just serve the market broadly.
Then there is the added component of reimbursement. These therapies, at least the ones currently being worked on, are expensive. Or at least the headline price looks expensive. They also cure blindness, so it's hard to put a price tag on these things.
There's going to be a societal debate about how do we pay for these things. That's not for us to get involved in. We're not in the business of participating in that reimbursement conversation, but our customers will be. And if that conversation doesn't yield a productive result, then the excitement for our customers to invest in gene therapies might be more limited.
I don't expect that to be an issue given the scientific impacts are so significant. I think they, together with the payers, will figure out a way to pay for it.
How is CDMO involvement different for cell and gene therapies compared to small and large molecule manufacturing?
LAGARDE: The landscape, particularly with large pharma, in regards to what facilities do they buy themselves and what services do they outsource, has sort of played out in small molecule. People have been making them forever, and as a result all these pharma companies have their own networks and partner with us. They find that balance between insourcing and outsourcing.
But on these new therapies, they haven't built their networks yet. What is interesting now is that outsourcing of these services for the gene therapy businesses is about 65% of the total spend in this space. There's much more outsourcing in that space because large pharma says, 'If I can find a credible partner like Thermo Fisher,' the need to build your own networks all of a sudden changes.
It doesn't mean they won't build. They're big pharma, they can't resist. They will build, but I think we're entering the conversation at the right moment.
One analyst mentioned they expect more M&A. Should we expect more M&A activity from Thermo Fisher?
LAGARDE:The company obviously has a lot of M&A capacity, so that's not going to be the constraint. The management team here has proven to be very disciplined on deploying the shareholder capital.
If we find good opportunities, we'll go pursue them, but they will need to fit our strategic lens. They need to fit the financial lens around the type of value they need to create. I think you will continue to see this company be a very disciplined, but active, participant in the M&A markets.
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