The inaugural issue of Project Evolution’s State of the U.S. AT CDMO Sector delved into the recent surge in layoffs within the Biomanufacturing CDMO markets which includes Advanced Therapies and biologic CDMOs. In that post, we discussed the factors we believe have contributed to this slowdown. Now, we'd like to step back and examine the broader industry landscape and understand how the industry
In this week's installment, we embark on Part I of our exploration into the rapid growth of the Advanced Therapies CDMO sector, with a particular focus on the significant roles played by Private Equity, Venture Capital, and Major International Conglomerates. Join us in the following week as we delve into the impact of mergers and acquisitions on the industry's expansion.
By delving deeper into these Private Placements, we aim to provide you with a comprehensive understanding of how financial stakeholders are shaping the landscape of Advanced Therapies and Biologic Capabilities in the United States. We will also explore the strategic considerations, regulatory implications, and competitive dynamics at play in this ever-evolving arena.
Setting the table. How is the Industry Segmented?
Before we dive into the rapid amount of private investment in the sector, I thought it would be beneficial to attempt a segmentation of the therapeutic category and CDMO capabilities. To accomplish this I am using the breakdown that I found in EY’s "How CDMOs are Leading Innovation for Pharmaceutical Partners" report found below. If you haven't already perused this report, I highly recommend taking a closer look at it. While it may not be flawless, I believe it offers the most comprehensive framework for understanding the sector and the various types of products within it.
For the purposes of this analysis, scrutiny will extend to CDMOs specializing in Advanced Therapies (Novel Therapies), and those boasting significant Biologic Capabilities from 2018 to 2023. In order to keep everything “bucketed” I have segmented CDMO providers into the following categories:
Advanced Therapies & Biologics
Number of Deals:
From 2018 to the present day, September 2023, our comprehensive analysis has diligently monitored fifty (50) investments and acquisitions made by prominent financial institutions in the realm of Biomanufacturing Contract Development and Manufacturing Organizations (CDMOs) in the United States. Among these investments, the category that has displayed the highest level of activity in private placements has been Advanced Therapies, accounting for a remarkable thirty-three (33) investments and/or acquisitions, which corresponds to an impressive 66% of all transactions within the period spanning 2018 to 2023. Furthermore, CDMOs with Advanced Therapies and Biologic capabilities combined, constituting 8% of the total, with a total of 4 deals, thereby emerging as significant contributors to the overall landscape, jointly representing nearly two-thirds of the entire deal flow.
Biologics, another noteworthy category, contributed to 26% of the overall deal flow, involving a total of 13 deals. It's noteworthy to mention that in 2018, Biologics dominated the scene, representing a staggering 75% of the deals, marking the only instance during our analysis when Biologics accounted for more than 30% of the annual deal flow.
Total Investment (in $m)
Our analysis was constrained to publicly accessible information, primarily focusing on the financial specifics of each deal. Nevertheless, throughout our investigation, we successfully ascertained the financial details for 35 out of the 50 transactions, accounting for 70% of the total deals. With this consideration, we find it valuable to explore the cumulative proceeds based on the available public data.
Advanced Therapies CDMOs garnered an impressive total of over $7.2 billion in private placements and acquisitions from leading institutions between 2018 and 2023. Intriguingly, the highest aggregate transaction value was recorded in 2019, largely attributed to EQT's substantial investment of $3.4 billion for the acquisition of Aldeveron, a prominent manufacturer specializing in Plasmid DNA.
Turning our attention to Biologics CDMOs, their financial activity during the same timeframe amounted to approximately $1.6 billion, signifying a substantial presence in the market. Notably, the most substantial transaction within this category occurred in 2020, involving the acquisition of Ambio for approximately $1 billion. Unfortunately, the specific details surrounding this transaction remain relatively scarce in the public domain, adding an element of mystery to this significant deal.
Leading Investment Firms
Throughout numerous industry discussions, I've nurtured a curiosity to discern the frontrunners in terms of investments within this sector. Unsurprisingly, Ampersand has exhibited remarkable dominance, having successfully executed seven (7) significant investments and acquisitions. It's crucial to highlight that this analysis encompasses data extending beyond 2018, notably incorporating Ampersand's pivotal investment in Brammer Bio back in 2016. This particular investment ultimately culminated in the acquisition of Brammer Bio by Thermo Fisher for a substantial $1.7 billion in 2019, further exemplifying Ampersand's impactful presence in the sector.
Below, we provide a comprehensive breakdown of the six (6) most active investors in this dynamic sector, shedding light on their noteworthy contributions and influence:
2023 Investments to-date
As of September 7th, 2023, there has been a conspicuous surge in deal activity within the current year. Our records indicate the completion of eight (8) significant transactions involving six (6) distinct companies, showcasing a diverse range of deals and investments. However, it's noteworthy that, at the current pace of investment, 2023 seems poised to be a year with a comparatively lower level of activity when juxtaposed against the robust deal flow experienced in 2022 and 2020.
Below, we offer an insightful overview of the noteworthy deals that have unfolded thus far in the current year.