Great piece! How much more revenue for the tools/chemicals companies on a biologic platform vs. small molecule? Or any view on BOM size for a small molecule vs. mAbs vs. cell/gene therapy?
Thanks! Historically, if you think about what was being sold for the small-mols, it was a large stainless steel reactor and the downstream separation/filtration equipment. Mostly capital. Some companies make the API (active chemical), which is combining the raw ingredients with whatever enzymes you need to produce the chemical. Mostly got outsourced to China/India over last couple decades. Some consumables with the filters coming out the other end, but otherwise not a lot of recurring rev benefitting the tools companies.
What's getting replaced is some of that capital equipment (smaller tanks) and all the electricity/water/sterilization chemicals used to clean the stainless steel tanks after. So the comparison is not apples-to-apples but obviously more revenue going to the tools guys for bioprocessing, largely at the expense of chemicals companies and utilities. Directionally, cell/gene therapies today take a LOT more consumables/$$ to make than mAbs. Hope that helps
that is helpful - and explains why companies like Avantor only have 15% exposure to small mol within their bioprocessing businesses... basically small mol manufacturing just didn't require much in the way of those specialty chemicals.
Iqvia (I am using as smartest proxy for industry growth) is forecasting ~9% biotech global $ market size CAGR over next 5 years, while all these companies (AVTR, DHR, TMO, Etc.) are saying the bioprocessing end-market is a low/mid teens growth - what do you think is the disconnect?
Great piece! How much more revenue for the tools/chemicals companies on a biologic platform vs. small molecule? Or any view on BOM size for a small molecule vs. mAbs vs. cell/gene therapy?
Thanks! Historically, if you think about what was being sold for the small-mols, it was a large stainless steel reactor and the downstream separation/filtration equipment. Mostly capital. Some companies make the API (active chemical), which is combining the raw ingredients with whatever enzymes you need to produce the chemical. Mostly got outsourced to China/India over last couple decades. Some consumables with the filters coming out the other end, but otherwise not a lot of recurring rev benefitting the tools companies.
What's getting replaced is some of that capital equipment (smaller tanks) and all the electricity/water/sterilization chemicals used to clean the stainless steel tanks after. So the comparison is not apples-to-apples but obviously more revenue going to the tools guys for bioprocessing, largely at the expense of chemicals companies and utilities. Directionally, cell/gene therapies today take a LOT more consumables/$$ to make than mAbs. Hope that helps
that is helpful - and explains why companies like Avantor only have 15% exposure to small mol within their bioprocessing businesses... basically small mol manufacturing just didn't require much in the way of those specialty chemicals.
Iqvia (I am using as smartest proxy for industry growth) is forecasting ~9% biotech global $ market size CAGR over next 5 years, while all these companies (AVTR, DHR, TMO, Etc.) are saying the bioprocessing end-market is a low/mid teens growth - what do you think is the disconnect?