Contract Development and Manufacturing Organization (CDMO) for aseptic products

A real estate investor with little health care experience sought commercial due diligence support to evaluate a fast growing contract development and manufacturing organization. Client needed to understand industry demand, competitive dynamics, and the potential of the company’s customer relationships.

Background

• Investor (Client) had signed a letter of intent with a contract development organization (Target) and needed expert assistance for due diligence

• Target was growing and seeking investment to expand its facilities for commercial scale manufacturing and to expand its commercial team

• Client did not have experience in CDMO market and needed broad assistance

Client request

• Formulate a set of hypotheses to test to validate the attractiveness of the investment

• Collect and synthesize market feedback to educate Client and guide growth priorities for Target

Key issues for consulting team to address

• Market trends

  • Size and growth for US aseptic pharmaceutical products, by segment

  • Outsourcing trends

  • Pandemic impact

• Company strengths and weaknesses

  • Customer relationships: current performance, projected growth, stickiness

  • Market assessment of Target’s key capabilities

  • Growth plan assessment

  • Management team assessment

  • Physical location assessment

• Competitive landscape

  • Competitive profiles of peers

  • Ability to compete against industry giants and to eventually be acquired by one of them

Health Business Group approach

• Health Business Group worked closely with the Client and Target to conduct the diligence

• Reviewed and augmented Investor data request

• Performed primary and secondary data gathering

  • Mined HBG knowledge base, trade press, competitor websites, market research and analyst reports

  • Conducted one-on-one interviews with Target, customers and lost customers

  • Interviewed industry experts and competitors

• Synthesized findings

  • Developed overall findings and summary findings and implications for each hypothesis

  • Presented to Investor and provided excerpt for Target

Outcomes

• Clarified issues for Investor, providing overall comfort level and prioritization of issues for focus

• Bolstered Target’s confidence in and comfort with Investor by bringing relevant expertise to the table

• Enabled Investor to renegotiate investment terms based on findings from the diligence