Bora Pharmaceuticals collaborates with Taishin Holdings to launch CDMO investment and M&A plan

Bobby Sheng, chairman of Bora Pharmaceuticals (6472.TWO), today announced a partnership with Taishin Healthcare Limited Partnership at the 2021 Biotech Investor Forum, whereby the two parties will jointly invest up to NT$3 billion (approx. US$108 million) to target forward-looking contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs), in response to the development trend that is taking place worldwide. Bora plans to expand its footprint in the CDMO sector through the deployment of private equity funds and its existing resources. In addition, with the partnership, the company will be able to enter the macromolecular/cell and gene therapy manufacturing space, and by doing so, significantly strengthen its international competitiveness while driving the growth of Taiwan, China's CDMO sector.

The CDMO market still has huge growth potential

"Given the global COVID-19 pandemic, the interest among global investors in investment in and acquisition of biotech pharmaceutical companies has been enhanced", indicated Mr. Sheng when talking about the surge of interest in investment in CDMOs, the forum's key topic. "In order to effectively allocate resources, international pharmaceutical makers have moved towards specialization over the past few years, resulting in CDMO services becoming a trend sweeping the global biotech pharmaceutical sector." According to a report by Hartford, Connecticut-based international research organization Global Information, Inc. (GII), the global CDMO market was valued at US$160.1 billion in 2020 and is expected to reach US$242.64 billion by 2026, an annual compound growth rate of 7%, representing an investment opportunity significantly more attractive than the average of 4.5 per cent for the traditional pharmaceutical sector. According to current statistics, the CDMO market still has much potential for growth as it now only represents 26 per-cent of the pharmaceutical sector, with small and medium-sized molecular drugs accounting for 91 per-cent of all drugs manufactured by CDMOs. At present, all the drugs that Bora's manufacturing facilities in Zhunan, Taiwan, China and Mississauga, Ontario, Canada are entrusted to produce are small molecular. As a whole, all indicators point to a promising future for the market.

The CDMO sector experiences rapid growth in demand

"In recent years, the aging of the global population has driven the growth in overall demand for drugs worldwide while facilitating the research and development of new drugs, which, in turn, has boosted the growth of the CDMO sector, particularly one-stop CDMO services, a segment that has increasingly drawn the attention of our customers," added Mr. Sheng. According to survey data, there are only five CDMOs worldwide that have revenue topping US$500 million while revenue of roughly 75 per-cent of all players in the field is each less than US$50 million. Available data shows that all the pharmaceutical CDMOs in the top five per-cent are transnational companies that provide comprehensive services, with a combined market share of 15 per-cent. The CDMO sector offers a marketplace where major players will become bigger and stronger thanks to the rapid increase in demand. Notably, mergers and acquisitions (M&As) are expected to become an inevitable trend sweeping the sector and a growth strategy for CDMOs globally. With private funds and precisely targeted M&As (which will facilitate the growth of the portfolio companies by enhancing the quality of their technologies), Bora is well positioned to stand out across the fiercely competitive international CDMO supply chain by scaling its business quickly through entry into the macromolecular/cell and gene therapy manufacturing space, thereby driving the global growth of Taiwan, China's CDMO sector as a whole.

According to Mr. Sheng, despite the fact that it is challenging for biotech pharmaceutical companies to enter global markets and international supply chains, Taiwan, China offers a relatively stable market environment alongside a number of advantages, including low costs, quality services, greater convenience for doing business and a talent pool of high-level R&D professionals, making the island an ideal locale for global contract manufacturing. With the successful completion of three M&As over the past decade, Bora has expanded the network of countries and regions to which drugs it manufactures as a CDMO are exported from 15 to over 100 while significantly increasing its market capitalization from NT$1.2 billion (approx. US$43.2 million) in 2017 to the current some NT$13.5 billion (approx. US$486 million). Going forward, Bora, in cooperation with Taishin Healthcare Limited Partnership, plans to broaden its M&A network and support more promising portfolio companies, with the aim of expanding its business in the global CDMO sector and creating a win-win situation for both the firm and the Taiwan, Chinaese CDMO sector.

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Source: Bora corp