Tag Archives: Contract Manufacturing Organization

Hot Life Science Investor Mandate 2: CMO / Corporate VC Doubles as Seed, Venture Investor

13 Nov

A medical device incubator and contract manufacturing organization (CMO) that also provides seed and venture funding to medical device companies is headquartered in the Western US. Typically, they provide up to $7 million in equity capital into companies. They are willing to consider companies globally. The firm currently has no set number of planned allocations, but they are willing to invest in as many companies as their facilities can handle.

The incubator is looking for companies that are in the medical device space. Within the medical device space, the firm is currently interested in companies developing disposable devices, reusable instruments, and surgical devices, among other relatively low-tech devices. The firm also is very interested in indications of cardiovascular, perivascular, orthopedics and diseases of the nervous system. The firm is willing to work with companies that are still developing their prototype to those that are into clinical trials. The firm prefers that a company’s product be eligible for the 510K regulatory pathway – as well as being eligible for reimbursement.

This organization is willing to work with companies that have incomplete management teams to those that have established corporate leadership. The firm almost exclusively deals with companies that are pre-revenue. The firm is willing to participate in the formation of a new company to the takeover of a more established one, and looks to leverage the firm’s capabilities in areas of R&D, Marketing, Sales and Prototyping in order to expedite the process of getting the companies device on the market.

Emerging Trends in the CMO World

22 Jan

By Alejandro Zamorano, VP of Business Development, LSN

Competition among the CMO world is at an all-time high. With one of the largest electronic providers in the world recently announcing that it would be spending an additional $2b to expand its operation in Seoul, some are left wondering when the arms race will stop.

Since 2004, CMO’s have seen strong growth as the industry has shifted to contract organizations to complete non-core functions. Despite the recession and a dwindling amount of investment in the biotech field in recent years, CMO’s have remained resilient. The CMO space is a crucial component in the biotech world today, and below are four emerging trends that will bear fruit in 2013:

  • Patent expiry of blockbuster drugs will force the industry to become increasingly price-competitive. Because of this, CMO’s will see lower margins, but higher volume, as manufactures increase production capacity to build economies of scale. [1]
  • Big pharma will continue to outsource non-core functions as they become leaner organizations. In the next couple of years, big pharma will begin to form strategic partnerships with CMO’s and CRO’s as they become increasingly reliant on their services. [1]
  • The CMO industry will see strong growth in emerging markets where skilled labor is considerably lower. China and India will see the strongest growth in the space for the next five years. [1]
  • The CMO space will see vertical consolidation as major players try to increase service offering. The next generation of “CMOs” will also specialize in drug discovery, toxicology, clinical research & development, and manufacturing.

The CMO industry is expected to grow at an annualized rate of 12.5% for the next three years, making the industry worth around $40b by 2015. Despite the optimism, the CMO industry is starting to suffer from increased competition and lower margins. The next generation of CMO’s will need to grow quickly and leverage their relationship with their existing customers in order to maintain a competitive edge. [2]

 

[1] Downey, William. “Bio-CMO Industry Trends – Contract Pharma.” Pharmaceutical and Biopharmaceutical Contract Servicing & Outsourcing – Contract Pharma. N.p., n.d. Web. 21 Jan. 2013. <http://www.contractpharma.com/issues/2012-05/view_features/bio-cmo-industry-trends/&gt;.

[2] Auerbach, Mike. “Contract Manufacturing Trends.” Pharmaceutical Processing. N.p., n.d. Web. 21 Jan. 2013. <http://www.pharmpro.com/articles/2011/02/business-Contract-Manufacturing-Trends/&gt;.

Hot Life Science Investor Mandate 3: Generalist PE Fund Interested in CRO’s, CMO’s – January 22, 2013

22 Jan

A private equity fund located in the Central US with roughly $1 billion under management intends to make allocations in the tens of millions on a case-by-case basis over the first half of 2013. The firm is generalist and invests across sectors, but has a specific interest in life sciences & medical technologies. Within this space, the firm is opportunistic in almost every aspect, but does require that an issuer be EBITDA-positive. This means that a firm must have at least one product on the market generating revenue to be of interest. Though the firm has looked at and invested in therapeutics and medtech companies historically, a primary interest currently is service providers such as CROs and CMOs.

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