Biologics driving M&A as Agilent snaps up specialist BIOVECTRA for $925 million

25-Jul-2024 - Last updated on 25-Jul-2024 at 11:56 GMT

As advanced therapies drive increasing market consolidation, the US giant Agilent Technologies has acquired the Canadian contract development and manufacturing organization (CDMO) BIOVECTRA for $925 million.

The deal, which was financed by cash and debt financing, is due to close before 2025 and will see BIOVECTRA shuffled into Agilent’s Diagnostics and Genomics Group. Agilent will blend BIOVECTRA’s expertise in biologics and active pharmaceutical ingredients with its own CDMO services, which specialize in oligonucleotides and therapeutics based on the gene editing tool CRISPR.

In a public release, Agilent president and CEO Padraig McDonnell said that BIOVECTRA's manufacturing capabilities “further expand Agilent's end-to-end biopharma offerings into new growth vectors, including workflows that seamlessly integrate analytical instrumentation, consumables, and a wide range of lab services."

In particular, Agilent plans to expand its portfolio with BIOVECTRA’s sterile fill-finish, plasmid DNA, messenger RNA (mRNA), and lipid nanoparticle formulation services. Agilent also aims to tap into manufacturing high-growth technologies including antibody drug conjugates, highly potent active pharmaceutical ingredients, and drugs targeting glucagon-like peptide 1 (GLP-1). Agilent also aims to blend its gene editing technology with BIOVECTRA’s biologics know-how.

CDMO consolidation

CDMOs are gaining momentum as complex therapies enter the market including CAR-T cell therapies, mRNA and gene therapies. The global market was worth $146.3 billion in 2023 and is expected to climb to $296 billion by 2033.

BIOVECTRA was founded in 1970 and was sold by the pharmaceutical company Mallinckrodt to the private equity firm H.I.G Capital in 2019. The Canadian company had a revenue of $113 million last year and double-digit growth this year, and its acquisition is expected to impact Agilent’s earnings per share, said the acquirer.

Agilent is best known as a lab supplier for instruments, software and consumables. The company invested $725 million in its CDMO arm last year to double its capacity for producing therapeutic nucleic acids amid soaring demand.

Increasing numbers of CDMOs are being snapped up by large companies as they hunt for spare capacity. One major example is the acquisition of Catalent by Novo Nordisk earlier this year as it scrambles to keep up with huge demand for its GLP-1 products Ozempic and Wegovy for the treatment of diabetes and obesity respectively. Another is the acquisitions of SCTbio and Skyepharma by the French special purpose acquisition company eureKING last year in the mission to set up a biologics CDMO.

M&A deals are also increasingly driven by demand for targets that have expertise in newer forms of therapies including cell and gene therapies.