77 TWENTYFOURSEVENBIOPHARMA Issue 1 / March 2025 those focused on advanced therapeutics and new platforms in particular are seen to have significant weakness. Playing a role in the current hawkishness is what Scanlan refers to as “the COVID hangover.” While government funding is always a presence in the market, 2020 saw an unprecedented amount of public funding enter the market to ramp-up research and production of COVID-19 treatments and vaccines. Many private equity firms responded in kind, and the early-stage biopharma market was flush with cash. While that buoyed the market for some time, particularly in the mRNA segments, the withdrawal effects are being felt to this day. Not only does the vacuum of public funding leave less available capital in an absolute sense, which will hurt for companies that ramped-up during that time period, Scanlan feels that many of the practices during that flurry of activity left investors a bit reluctant to dive back into those waters. “The amount of investor diligence around some of these things during the COVID period was a lot more limited than it is today,” said Scanlan. “And so deals take a lot longer to get done because there’s a lot more investors being a lot more sort of specific and hawkish around the investments that they are making.” “And those CROs and CDMOs that were supplying all that inventory, all those product companies, to companies that were developing or producing excipients and other inputs into chemical and biopharmaceutical manufacturing processes, they were stocking up on all that stuff,” added Scanlan. “Post-COVID, all that inventory needed to be utilized, and so the orders weren’t being placed with the suppliers for those materials. It was a pretty big hangover.”1 Disruptive technologies and larger macroeconomic trends Given Scanlan’s thesis that venture capital dollars were largely moving away from more novel treatments, the question loomed about where recent disruptive technologies fit into the picture. Cell and gene therapies, for instance, were a frequent topic of interest among attendees of CPHI Milan. However, while Scanlan noted that investor appetite for these products is not currently robust, he was confident that investment would rebound when market conditions changed. Instead, innovations within more traditional dosage forms, like small molecules, would gain investor attention at the moment. “Good old-fashioned small molecules are not, relatively speaking, expensive to develop. There are a whole myriad of new types of targets that are being developed for small molecules, RNA targets for small molecules are the next wave of very interesting applications for small molecules,” said Scanlan. “Small molecules get a lot of application in CNS indications because they easily get through the blood brain barrier, compared to others. So it’s not to say those challenges won’t be overcome with large molecules and other advanced therapeutics or different administration and delivery opportunities. But today there’s a place for all of them.” Another topic that loomed large across all attendees at CPHI Milan was the BIOSECURE Act, a pending piece of legislation in the United States. Designed to encourage friendshoring and move biopharma business away from China, the bill has sat pending in Congress for an extended period of time; nevertheless was on the tip of the tongue of many attendees, particularly those working in the European and Indian markets. Indeed, Scanlan feels that the market is already responding to the bill. “There is the beginning of fairly widespread shifts. And in some of the supply base, anecdotally, there’s CDMOs that I’m talking to in the North American market, biologic CDMOs and small molecules are getting development contracts and product manufacturing contracts that [once went] to China. That’s already happening, regardless of BIOSECURE,” said Scanlan. “And in talking to a number of my colleagues and friends in Chinese CDMOs, they’re seeing the ripple effect.” Pharmapack Europe will see more than 350 exhibiting companies from across more than 70 countries learn about emerging trends, discover cutting-edge innovations, and partnering to advance huma health. In fact, as Venture funding returns to biotech, one of the event’s most anticipated platforms is the new pharma start-up market where early stage innovators will be showcased to a growing base of investor and commercialization partners – these are the innovations likely to drive growth over the next few years. In total the event will play host to four dedicated pharma track and more than 50 speakers. Register not to get your early bird registration (until December 18th). Reference 1. I just thought this was an interesting aside in our COVID talk, but if you think it detracts from the overall flow of the article feel free to cut it. GRANT PLAYTER Editor 24/7 BIOPHARMA CPHI REPORT
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