Hey big vendor... Is bioprocessing consolidation good for the end-user?

While the multi-billion dollar deals of 2014 and 2015 – Merck/EMD Millipore and Sigma-Aldrich, Thermo Fisher and Life Technologies, etc. – further contracted an already consolidated industry, acquisitions continue as the handful of players remaining look to compete through both strengthening their core businesses and taking control of their own supply chain.

Recently Sartorius​ bought its long-term PAT and QbD software partner and GE Healthcare​ acquired a stake in its automation technology partner Zenith, while earlier this year Thermo Fisher​ bought its long-term partner Finesse solutions.

These add to the host of strategic acquisitions and bolt-on deals witnessed in the bioprocessing services and equipment space over the past few years, as the (admittedly amateur and garish) infographic at the end of this article demonstrates.

But what does this mean for the end-user? We reached out to a number of experts who held mixed opinions about the continued M&A activity by the major bioprocessing firms.

Muscle moves?​

“Personally I think this type of consolidation is horrible for the end-user,”​ said vice president and principal consultant at Bioprocess Technology Consultants (BPTC), Susan Dana Jones.

Fellow BPTC consultant Denis Boyle agreed, adding “it can’t be good for end users when you only get to talk with a few big players who channel you where they want you to go.” ​In his opinion, the targeting of third-party partners “feels like a muscle move on the big players, especially with big GE and Sartorius moving so quickly in several areas.”​

Patti Seymour, BPTC senior consultant offered a further perspective: “While these large companies continue to acquire both small and large entities – integration can be a very big challenge; this can lead to more inefficiencies in the near term while the acquirer and acquiree sort out how to live and work together and how they present themselves to their customer base.”​

Price hikes and bureaucracy?​

Meanwhile Arvilla Trag, president at Midwest Consulting Services, was concerned that as vendors grow they will be less responsive to small clients, focusing only on their large customers.

“​Additionally, big companies are not as motivated to provide good customer service; they have uber-strata of bureaucracy to cut through; and have a lot more difficulty thinking outside the box.”​

And, importantly, a lack of competition in the sector could lead to suppliers raising prices and impact scheduling beyond what a small client can manage. “Monopolies are never a good idea!” ​she added.

Better buying power?​

But if the major players – GE, Sartorius, MilliporeSigma, Thermo Fisher, Danaher (Pall Corporation) and Repligen – don’t consolidate further, there could be significant benefits for end-users, said BPTC senior consultant Frank Riske.

 “If they do not become a monopoly, a potential advantage of a big company is in buying power; which may translate to better pricing for the consumer. A greater knowledge base can also sometimes help in problem solving.”​

And fellow senior consultant Sheila Magil also saw some positives: “In some cases, consolidation makes it easier for the small biotech to get all of the work done without having to manage too many suppliers. For example Sartorius’ acquisition of BioOutsource and Cellca allows a company to go from cell line creation through MCB/WCB production fairly seamlessly.”​

Do you feel further consolidation in the bioprocessing space will be an advantage or a disadvantage for the end-user?