Novasep's July 2009 acquisition of Henogen, a CMO focused on the development of new biopharmaceuticals, has become the link between Novasep's Process and Synthesis business units. The acquisition has also given the company access to manufacturing solutions covering almost every type of biopharmaceutical, an area that is gaining importance within the pharmaceutical industry. Brandi Schuster spoke to Novasep's director of marketing and business development Jean Blehaut about the merger and how pipeline gaps in big pharma have affected the active pharmaceutical ingredients market.

Has Novasep already seen some tangible benefits from the acquisition?
J. Blehaut: Absolutely. We are seeing a number of benefits that were expected, i.e. a real fit between Novasep Process expertise in the downstream processing of biopharmaceuticals and Henogen unique competencies in upstream technology platforms, i.e. mammalian cell culture, insect cells culture, viral vectors, bacteria and yeast fermentations, such as E. coli, P. pastoris and L. lactis, presenting to our customers a unique offering in process development, CMO and equipment supply along the development cycle of their biomolecules - monoclonal antibodies recombinant proteins, vaccines, etc.

We are also having discussions regarding Novasep Synthesis in the specific field of antibody drug conjugate development. Henogen is really bringing in a link between our two business units, Synthesis and Process. We now have a monoclonal antibodies manufacturer and a high potent API facility within Novasep Synthesis. This means we can do everything - and this is a very unique offering.

How have pipeline gaps within big pharma manifested itself in the manufacture of APIs?
J. Blehaut: The pipeline gap in big pharma is more of a long-term issue. We are involved in many projects, from the early phases of clinical development - Phase I and II - to pilot and final scale manufacturing. But our activities are not only limited to big pharma, so the projects do move ahead.

It has been a challenging period since 2008 and the lack of funding faced by biotech companies has delayed some projects; but we are able to work with both small and large companies. It's important to select the right projects and to also have a bit of luck in seeing the projects moving towards commercialization. If we have fewer projects coming from a big pharma company due to their thinning pipeline, that can be picked up by small and midsize companies who are working on substances to fill the gaps.

So the impact has been negligible?
J. Blehaut: If a company is dependent on one or two partners, then they obviously would be affected and would have difficulties in finding alternative businesses to fill the gap. This is why we strive to have a broad customer base in order to hedge these types of issues. This is not to say that we can't be affected; if we are producing a Phase III product that dies before the New Drug Application, then obviously this particular project can affect our potential revenue streams in the future. That is why it is important for us to be as broad as possible in our customer bases in order to mitigate these eventualities.

2009 saw a series of biotechs being bought up by pharma companies; do you see a similar trend happening within the API business?
J. Blehaut: We've done so (laughs)! But this is not a new trend; this has been the situation for the last 10 years or so. There have been many mergers and the industry is still very scattered, on both the customer and supplier side, especially when you compare it to other industries.

I think we can anticipate mergers and acquisitions of biotechs within the pharma industry to continue, if not accelerate. Considering the trend within the approval of biopharmaceuticals and their future market share, all of the players in the pharma industry will want to have a substantial part of their business being associated with biomolecules.

How important is biotechnology for Novasep?
J. Blehaut: It was clear that it was critical to develop our bioactivity, and we have done this through organic growth and investment in biomanufacturing capabilities. We are now starting validation on a brand-new commercial biomanufacturing plant that we have commissioned and engineered within the last two years at our Novasep Process site in Pompey, France. This is the result of an approx. €20 million investment, which is a significant project with respect to the size of our company.

And the acquisition of Henogen was a major step.
J. Blehaut: Yes; while the company is not the biggest bio CMO, they have a broad scope of knowledge and expression technology. They also have some niche businesses that are very attractive such as vaccines and pathogen manipulation in BL2/BL3 high biosafety suites. Novasep is not in the business of just buying up biotech companies; instead, we follow our customers' lead, and it is our full intention to support them and to grow with their projects.

So partnerships and acquisitions are customer driven.
J. Blehaut: Exactly. We don't want to buy capacity just for the sake of having it. That is a business model that many companies follow. Those companies who invested in large biopharma facilities in the '00s are now having to resize their oversized plants, because they don't have the orders to fill them. This means that many companies are having to spend a tremendous amount of money in downsizing their plants - because honestly, very few products need 20,000 liter fermenters or bioreactors.

This trend, driven by ever-increasing cell culture titers, as well as the development of more targeted medicines, is going to continue, so it is much better to acquire or develop the facility that suits given projects rather than trying to fill empty facilities with customer projects that might not even be a good fit. We now have demonstrated with several customer projects that our unique business model, combining process development and supply with contract manufacturing, is a great value proposition, for both synthetic APIs and biopharmaceuticals: our powerful engineering capabilities enable us to build or modify manufacturing plants to our customer's requirements in a very time-efficient manner, thus delaying their financial commitment, reducing their risk and improving their global return on investment.

Do you see biopharmaceuticals eventually pushing synthetics out of the spotlight?
J. Blehaut: Biopharmaceuticals are going to continue gaining in market share, to reach probably around 25% in about five or six years. Even now, we see that the pharma pipeline is becoming richer in biopharmaceuticals. But it will most certainly not lead to the disappearance of the traditional synthetic molecules.

Do you think biopharmaceuticals will someday make up a bigger share of the market than the traditional synthetics?
J. Blehaut: I am not an expert in long-term projections; let's talk again in 20 years.