Japanese Invasion in the European Biologicals Manufacturing space

The Japanese manufacturer AGC is acquiring CMC Biologics for nearly €500M, its second European purchase this year aimed at entering the profitable biologicals manufacturing space. 

CMC Biologics is a contract development and manufacturing organization (CDMO) in Copenhagen with over 500 employees that focuses on biologicals using mammalian and microbial hosts. Its services must have impressed AGC Asahi Glass, a manufacturer from Japan that is acquiring the company for €489M (¥60B). Scheduled for the beginning on 2017, this could be one of the biggest biotech deals that Denmark sees next year.

AGC, a manufacturer of glass, chemicals and high-tech materials, entered the biologicals space this August when it acquired the German CMO Biomeva for an undisclosed amount. With this second acquisition, AGC not only strengthens its position in Europe but gets access to the US biologicals market: CMC has facilities in Seattle and Berkeley.


CMC Biologics facilities

CMC Biologics has facilities in both Europe and the US

These strategic decisions are not surprising at all since biologicals make a lot of money: last year, the top-selling drug was an antibody that generated an impressive €13B ($14B) in revenues for US-based AbbVie. Among the 10 top-selling drugs, 7 were biologicals.

In particular, Europe is a leader in the development of biosimilars, i.e. biologicals that mimic an already authorized pharmaceutical product. The competitive advantage of these drugs is that they provide a 20-30% price discount with respect to the original drug. With the market of biosimilars booming and expected to reach €250B by 2020, big pharma are starting to jump in the space, with recent examples coming from Boehringer Ingelheim or Sanofi.

These acquisitions by AGC seem to be the natural next step in a system that is transitioning from small molecules to biologicals, and where biopharma competes to launch ever more effective and affordable products.

Images: Dmitry Kalinovsky/shutterstock.com; CMC Biologics

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