Recent Healthcare Trends & Transactions

Week of October 8, 2024 | Vol. 13, Issue 41

Global Healthcare Transaction Activity

Source: Data aggregated from S&P Global Intelligence. Click above for more details.

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More data is suggesting that the contract development and manufacturing organization (CDMO) space is set up for a significant rebound in the coming years, according to the CPHI Annual Report and Survey. This comes ahead of the CPHI Milan conference that the Bourne team is attending this week. Specifically, the CPHI data suggests that ~49% of the CDMO industry is “highly positive” on contract services over the next 18 months (vs 44% who are "neutral" and only 7% who were “negative”). Two top areas of focus for executives are manufacturing capacity shortages (related to the strong consumer demand for GLP-1 medications) and the impact of the BIOSECURE Act on global pharma supply chains. Of note, only 19% agreed that China-based CDMOs are “a threat and should be removed from Western supply chains” -- vs 38% of respondents who said that the BIOSECURE Act “sets a concerning precedent for the industry.” Read More

Potentially Reaccelerating Demand Trends for Global CDMOs

Source: BioPlan Associates -- as presented at the Contract Pharma 2024 Contracting and Outsourcing Conference in New Brunswick, New Jersey (September 26-27)

Multiple media reports suggest that the Board of Directors of CVS Health is contemplating a possible breakup of its retail and its health plan businesses. However, Glenview Capital, an activist shareholder, denied that it is pushing for any breakup plan. CVS Health is one of the largest healthcare conglomerates today due to almost 20 years of major acquisitions, including (among others) a $17 billion acquisition of Caremark in 2017, a $2 billion acquisition of Coram in 2014, a $10 billion acquisition of Omnicare (in 2015) and a $70 billion acquisition of Aetna in 2018. Even recently, CVS Health has continued to close big-ticket acquisitions, including Oak Street Health (for $10.6 billion in 2023) and Signify Health (for $8.0 billion in 2022). In our view, a scenario break-up of CVS Health could have material ramifications for the broader healthcare competitive landscape. In the meantime, CVS Health announced plans to lay off another 2,900 corporate positions as part of a broader plan announced this summer to eliminate $2B of annual costs. Read More

California Governor Newsom vetoed Assembly Bill (AB) 3129, a widely watched piece of legislation that would have given the state of California the ability to block private equity acquisitions of healthcare facilities and service providers. Private equity firms and hedge funds already are required to notify California's AG when they want to buy certain healthcare businesses. However, the vetoed legislation would have also required the AG to give written consent at least 90 days before transactions valued at $25M or more (with the only exemption being for deals involving for-profit hospitals). This likely kills momentum for this in other states. Read More

The pharma industry continues to invest billions in production capacity to keep pace with surging demand, particularly from GLP-1 diabetes and weight management drugs. This week, Eli Lilly announced plans to invest $4.5 billion into a new R&D and manufacturing facility (to be called the “Lilly Medicine Foundry”). The foundry is scheduled to open in late 2027 and will support small molecules, biologics and nucleic acid therapies. New therapies developed at the foundry will be transferred to other manufacturing sites for full-scale production. Notably, this adds to the massive project Lilly is building near its headquarters in Indiana, at the LEAP Research and Innovation District. Lilly already has committed $9 billion to constructing an active pharmaceutical ingredient plant. In total, since 2020, Eli Lilly has invested upwards of $20 billion in building facilities in the United States. Read More

There is increasing evidence that the pending BIOSECURE Act is already having it intended effect even before it has received a formal vote in the Senate. Recall the BIOSECURE Act passed the House of Representatives in September. Specifically, new nedia reports suggest that WuXi AppTec has been in talks for several months with potential acquirors of its cell and gene therapy manufacturing business, WuXi Advanced Therapies. At the same time, it is being reported that WuXi AppTec’s sister CDMO, WuXi Biologics, is working with advisors to gauge potential interest in two of its German manufacturing facilities it purchased from Bayer and expanded last year. Media sources suggest new business for WuXi Biologics in Europe has dried up in recent months as biopharma companies have become more skittish about working with a Chinese company. Read More

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