During a recent quarterly earnings call, the head of one of the busiest contract development and manufacturing organizations (CDMOs) warned that in the coming months, biopharma companies will probably cut drug discovery activity. “The lack of a recovery in demand for our biotech clients as well as recently emerging and softening demand trends in our global biopharma client base have caused us to take a much more negative view of our growth prospects for the second half of the year,” said James C. Foster, chairman, president, and CEO of Charles River Laboratories.
(Note: Charles River appears in a “ ” sidebar that accompanies the online version of this article. The company does not indicate how much revenue from its Manufacturing Solutions segment reflects CDMO activity, confounding ’s Top 10 ranking scheme.) Foster also noted that most global biopharma companies have restructuring programs, which are “likely precipitated by the Inflation Reduction Act or pending patent expirations or both.
” Essentially, companies are tightening their budgets and pruning their pipelines. “Revenue for this client base continued to increase in the second quarter; however, proposal activity and bookings began to notably decline and diverge from biotech clients during the second quarter,” Foster explained. “Because of this, the second half revenue growth that we previously anticipated will not materialize.
And in fact, demand is expected to continue to soften for global biophar.