Thread by @unseenvalue

Heads or Tails ! 💰💰
Scenario#1 or Scenario#2 ! 💰💰
#crams #cro #cdmo

Across Animal, Agro / Crop and Human Pharma, Biotech
#ActecLifesciences
#DishmanCarbogen
#DivisLabs
#Hikal
#JubilantLifesciences
#LaurusLabs
#Neuland
#PIIndustries
#PiramalPharma
#SuvenLifesciences
#Syngene

#CRAMS is like an ‘auto ancillary’ partnering with OEMs (life sciences innovators) and helping customer’s science and intellectual property via their cross-customer learnings and scale.

Extending this thread to spell out few key differentiators for high quality #CDMO #CMO #CSM

1.Partnership mindset – best lab-to-market innovations are those that are developed via global partnerships where innovator and supplier teams collaborate. Innovator gets the necessary knowledge and commercial-scale production from #CDMO #CSM #CMO #CRAMS #CRO

Sticky Relationship: When products / services are highly differentiated – suppliers (#cdmo #cro #crams) will be more powerful! If it is expensive/disruptive to move from one supplier to another, buyer (innovator) becomes relatively weak and dependent! #customsynthesis

Great respect for innovators’ intellectual property: #CDMO #CRAMS #CRO must have unquestionable intellectual property & data integrity track record. For innovators – data confidentiality, data integrity and protection of their IP is way more important than simple cost arbitrage.

Courage to sacrifice short-term gains for long-term glory: One way to throw competitors off balance is to mask high performance so rivals fail to see your success until it’s too late!

#CRAMS firm must have the strategic intent to invest in requisite technology & infrastructure.

State-of-the-art-infrastructure & technology platforms - health care industry has also shifted toward personalized medicine, with more pharma #CRAMS producing smaller volumes of medications that target very small patient populations, such as people with specific genetic traits.

Impeccable regulatory compliance: Locking-in customers and locking-out competitors having iffy cGMP / FDA track record.

In last few years USFDA censure / fines / import bans have separated the men from the boys in #CDMO #CRAMS #CRO

#Hikal AR adds more:

Investments in Capacity: #CDMO is CAPEX upfront! Often 5 years ahead of any material cash flow (#Biocon Malaysia facility being one such example). Filings, Validations and Regulatory approvals take time!

#API / #CRAMS report depreciation / pain upfront | Gains are back ended!

Relationship Profile: Your #CRAMS quality is determined by the profile of customers you serve!

Take #syngene for instance – global giants like #Amgen, #GSK, Bristol-Myers Squibb, #Baxter and many more have not hesitated to partner with them to expedite their research pipeline.

Lastly, don’t bet your house (25-30% portfolio) on just one or two #CRAMS / #CSM stocks as these businesses have long gestation periods and lumpy cash flows.

However – the longevity of runway and sustainability is unquestionable so avoiding them is also not a prudent strategy!