Unlocking Value in the Biopharma Supply Chain: Key Investment Opportunities for Private Equity

The biopharma supply chain continues to evolve, offering private equity (PE) investors a unique opportunity to create value. With the growing demand for innovative drug modalities and specialized services, there are several ways for PE firms to capitalize on this dynamic sector. A successful investment thesis can incorporate both modality exposure (large molecules and biologics vs. small molecules) and the value chain segment (such as raw materials, drug substance, drug product, devices, packaging, and distribution). 

In this article, we will explore three key investment themes with significant growth and profitability potential for private equity investors in the biopharma supply chain. 

1. Increasing Exposure to High-Growth Large Modalities and Innovative Drug Classes

One of the most promising areas for investment in the biopharma supply chain is exposure to higher-growth and innovative large modalities. As biopharma companies continue to innovate, new drug classes are gaining traction, particularly in biologics and large molecules. Key high-growth modalities include: 

• Antibody-Drug Conjugates (ADCs): With a projected CAGR of 23%, ADCs are becoming a cornerstone of cancer therapy, offering opportunities for investment across the value chain, including drug substance manufacturing and formulation. 

• Cell Therapy and Gene Therapy: Both are expected to grow at a CAGR of 42%, driven by the launch of new therapies and the increasing demand for personalized medicine. 

The growth of these large modalities presents a strong case for PE investors to increase exposure in companies that offer specialized services to support these therapies, such as drug substance manufacturing, biologics development, and finished dosage forms. 

On the other hand, small molecules (which still account for around 50% of pharma revenues) are growing at a slower rate of about 5% annually, primarily due to price compression in generics and drugs losing exclusivity. For investors, prioritizing larger modalities offers stronger growth potential in the next 3-5 years. 

2. Investment in High-Growth Subsegments for Inputs and Niche Services

In addition to large modalities, there are promising subsegments within the pharma supply chain that offer opportunities for investors to create value. These subsegments require specialized expertise or inputs, and they are critical in enabling the success of high-growth therapies. Notable investment opportunities include: 

• Bioprocessing Inputs for Cell Therapies and ADCs: As the demand for cell therapies and ADCs continues to rise, there is significant investment potential in bioprocessing inputs and consumables, such as single-use bioreactors used in drug substance manufacturing. 

• Sterile Fill Finish for Injectables: Small-scale manufacturing services and sterile fill-finish capabilities are increasingly capacity-constrained, presenting an opportunity for investors to expand capacity and meet growing demand. This is especially relevant as the demand for biologics and injectable therapies rises. 

• Niche Scientific Expertise: Analytical services and methods for cell and gene therapies, as well as novel monoclonal antibodies, are becoming essential for drug development. Investors have an opportunity to scale businesses focused on key technologies like gene therapy methods development. 

By investing in companies with specialized capabilities, PE firms can tap into these high-growth subsegments, benefitting from a growing need for expertise and capacity in biologics and advanced therapies. 

3. Expanding Investment in Specialized Drug Delivery Device Components

The rise of therapies like GLP-1 for type 2 diabetes and obesity is driving a surge in demand for specialized drug delivery devices, such as autoinjectors. With the expected market expansion for GLP-1 therapies, the need for associated device technologies, primary containment components, and raw materials is set to grow substantially by 2028. 

Opportunities in this segment include: 

• Autoinjectors: Demand for GLP-1 autoinjectors is creating a large market for devices and their components. Investing in companies involved in the final assembly and delivery device components can offer attractive returns. 

• Syringe Technologies and Primary Containment: As the demand for injectable therapies grows, so does the need for high-quality containment systems and syringe technologies, creating long-term investment potential. 

While this sector is currently outperforming the broader pharma supply chain, the introduction of oral GLP-1s could shift demand patterns. However, investing in specialized delivery technologies and components for injectable therapies will continue to be a lucrative opportunity. 

Leveraging Industry Insights for Sustainable Growth 

Successful PE investors must stay ahead of industry trends and make granular investments that align with future growth areas. Understanding the underlying drug pipeline and tracking new pharma launches will be critical for navigating the complexities of the biopharma supply chain. 

By leveraging operational efficiency improvements (e.g., optimizing equipment effectiveness and throughput) and incorporating sophisticated B2B practices such as dynamic deal scoring and AI-driven lead generation, investors can accelerate revenue growth while minimizing overhead costs. PE firms that strategically identify and invest in high-growth areas, such as large modalities, niche services, and specialized drug delivery technologies, will position themselves for strong returns over the next 3-5 years. 

Partner with BioBoston Consulting for Expert Guidance 

Navigating the complexities of the biopharma supply chain can be challenging, but with the right insights and strategy, private equity investors can unlock significant value. At BioBoston Consulting, we specialize in helping PE firms identify high-growth investment opportunities across the pharma services landscape. Our expertise in operational efficiency, market analysis, and strategic execution will empower you to make informed investment decisions and drive long-term growth. 

Ready to seize the opportunities in the biopharma supply chain? Contact BioBoston Consulting today to discover how we can support your investment strategy and help you capture the value in this rapidly evolving sector.