BQ Prime has done very good interview with Dr Chava about CDMO space in general.
Pharma companies are freezing their partnerships in the next two months. If that is the case, pharma companies would like to partner with companies with high governance and quality track records and invest ahead of time to build the required capacities. PPL tick all the boxes, so this shall bode well for them.
PPL also hinted that they see increasing customer action for their phase 3 molecule.
Divis also said the same thing.
Syngene made a huge investment in its biologics manufacturing facilities first. Once they were ready, then Zoetis signed ten years deal with $500 million with them.
Suven also said the same thing. Syngene said the same something a few quarters back after work started recovering from Covid.
Dr Chava suggested that pharma companies would like to partner with companies with spare capacities. Earlier, having a spare capacity was difficult as companies tried to make the most of their capacities. In the CDMO world, spare capacity is an advantage. Also, CDMO players need to build capacities as well as enhance capabilities to stay relevant in the market. From planning to getting becoming a commercial takes anything between 3 to 5 years. Companies which have their molecule in phase 3 want to have spare capacities as they do not want to end up in a position to relook at the supply chain.
PPL’s current Capex seems to the in line with this IMO. The capacities they are building will become operational and QA validations after 2/3 years down the line, possibly more for some areas. However, the willingness to invest even when they are going through a tough phase will give clients lots of confidence when selecting PPL for CDMO players.
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