CDMO Financial Resilience Through Technology & Investment

Edition 3 / October 2023

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Author
Gary Hughes
Chief Financial Officer,
CordenPharma

Staying the Course in 2023: Financial Resilience Through Innovative Technology & Strategic Investment

Happy Autumn! Welcome to the Q3 2023 Edition of Corden Connect – this time we will look at how the global economy is impacting our business, and what we are doing to weather the storm for 2023 and beyond. My name is Gary Hughes and I joined CordenPharma in March 2023 as the Chief Financial Officer.

The last few years have been rather unprecedented in economic terms. First the COVID-19 pandemic set off a global economic crisis the likes of which had not been seen for decades. Over 100 million people became unemployed globally during 2020, while lost working hours as a result of the pandemic were estimated at the equivalent of between 250 and 400 million full time jobs, resulting in significant loss of productivity and loss of labour income. Lockdowns had significant impacts on businesses, particularly in tourism, transport and hospitality, but also on the manufacturing sector.

Then as recovery was starting to take hold geopolitical events triggered a significant slowdown in growth and high inflation on the back of rising food and fuel prices. The resulting rise in interest rates as central banks seek to bring inflation back under control has had a significant impact on global economic activity, pushing many countries into recession. As of today, inflation remains stubbornly high, with interest rates not expected to come down until Q2 or Q3 of 2024.

Whilst the pharmaceutical sector is arguably more resilient to economic downturn than many other industries due to the demand for life saving drugs being relatively inelastic and the approval of new drugs continuing apace, the industry still faces challenges in the current global macro-economic environment. For instance, some new medicines have not taken off as quickly as anticipated on commercial launch, whilst biotech companies, an important segment for CordenPharma, have faced setbacks in 2022 and 2023 stemming from difficulties securing investments after the boom on the back of the COVID-19 pandemic, with many companies announcing significant lay-offs as a result.

To date CordenPharma has remained relatively resilient through these difficult times by implementing a strategic focus on supporting innovators’ complex modalities through:

• >> Development & Innovation
• >> Diversified Business Model
• >> Technology & Science Advisory Board
• >> Capital Investments
• >> Operational Initiatives

Our focus on Development & Innovation has always been at the core of what we do. In 2020 CordenPharma developed a straightforward, short synthesis of a highly pure plant-derived cholesterol called BotaniChol^® used in the production of lipids for mRNA vaccines, allowing us to contribute to the global fight against COVID-19 and keep our business strong through the global crisis that ensued. This innovation continued in 2023 with Project AIRMAIL – the use of Artificial Intelligence in drug development using a machine learning algorithm for the LNP Formulation of RNA & DNA actives, and the opening of CordenPharma’s Drug Product Innovation Centre of Excellence with the addition of bioavailability enhancement.

Furthermore, our Diversified Business Model, focusing on six technology platforms – Peptides, Oligonucleotides, Lipids & Carbohydrates, Injectables, Highly Potent & Oncology, and Small Molecules – means we are not overly reliant on a single business segment. Our decision to re-enter the Oligonucleotide manufacturing market was a particular highlight in 2023. This additional platform helps complete our full-service CDMO offerings of APIs, Lipid Excipients and Drug Products for our customers spanning their entire product lifecycle, from clinical trials (Phase I, II and III) through to commercially available products. This means our portfolio supports products ranging from those actively marketed through to the next potential blockbuster.

This focus on innovative technology has had a major role in driving continued growth in CordenPharma, even during difficult market conditions. To further elevate our offerings and solidify CordenPharma’s commitment to stay at the forefront of the pharmaceutical and biotechnology industries, we recently announced the creation of a new Technology & Science Advisory Board (TSAB). These selected advisors were carefully chosen for their expertise from various disciplines, including chemistry, pharmacology, biotechnology, and regulatory affairs, to provide valuable insights and strategic guidance on emerging trends, cutting-edge technologies, and regulatory advancements across all six CordenPharma technology platforms.

To continue realizing the organic growth opportunities identified from this pursuit of innovation, the business has been making significant strategic Capital Investments over the course of the last 18 months to expand and upgrade our facilities. In particular we expanded our peptide manufacturing capabilities in both Frankfurt and Colorado, including the inauguration of the newly upgraded facilities at CordenPharma Colorado, the largest Solid-Phase Peptide Synthesis (SPPS) manufacturing facility in the world.

Lastly, we have focused on numerous Operational Initiatives to drive efficiency in our sites, improve our sustainability and lay the foundations for continued growth. This includes our 2023 initiative of setting science-based emission reduction targets through joining the SBTi to reduce waste and energy consumption, as well as programmes to increase productivity, improve quality control procedures, and standardise global work practices.

We look forward to a successful Q4 as we continue strengthening our offerings and support to customers delivering critical medicines to patients. Despite the challenges we have all traversed in the last months and years, the pharmaceutical industry has proven time and again that we can stay the course by working together.

Gary Hughes
Chief Financial Officer
CordenPharma International