According to Novartis's CEO, a top reason for rejecting potential biotech partners is their underinvestment in Chemistry, Manufacturing, and Controls (CMC). Startups often neglect this unglamorous work, leading to deal failure because the acquirer can't be sure the drug can be scaled efficiently and safely.
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Unlike small-molecule drugs, biologics manufacturing cannot be simply scaled up on demand because "the process is the product." A superior manufacturing and supply chain capability is not a back-office function but a key market differentiator that commercial teams must leverage to win customers and outpace competitors.
A Complete Response Letter (CRL) from the FDA due to manufacturing issues can destroy a biotech. CEO Ron Cooper warns leaders to invest heavily in Chemistry, Manufacturing, and Controls (CMC) early, even when the cost exceeds the clinical trial spend. This early investment in professionalizing CMC is critical to de-risk the company's future.
A significant portion of biotech's high costs stems from its "artisanal" nature, where each company develops bespoke digital workflows and data structures. This inefficiency arises because startups are often structured for acquisition after a single clinical success, not for long-term, scalable operations.
The transition from a resource-rich environment like Novartis to an early-stage biotech reveals a stark contrast. The unlimited access to a global organization is replaced by a total reliance on a small, nimble team where everyone must be multi-skilled and hands-on, a change even experienced executives find jarring.
Unlike most biotechs that start with researchers, CRISPR prioritized hiring manufacturing and process development experts early. This 'backwards' approach was crucial for solving the challenge of scaling cell editing from lab to GMP, which they identified as a primary risk.
The biotech ecosystem is a continuous conveyor belt from seed funding to IPO, culminating in acquisition by large biopharma. The recent industry-wide stall wasn't a failure of science, but a halt in M&A activity that backed up the entire system.
When seeking partnerships, biotechs should structure their narrative around three core questions pharma asks: What is the modality? How does the mechanism work? And most importantly, why is this the best differentiated approach to solve a specific clinical challenge and fit into the competitive landscape?
To overcome production bottlenecks, Legend Biotech employs a diversified manufacturing strategy. They operate their own large facilities in the US and Belgium while also contracting with pharmaceutical giant Novartis to produce their CAR T therapy. This enables a rapid scale-up to a planned 10,000 annual doses.
M&A is often framed as a win, but it can be detrimental to patients. The acquisition of an aggressive, fast-moving biotech by a large pharma company can lead to slowed development timelines and more conservative regulatory strategies, ultimately delaying access to life-saving treatments.
The immense capital investment needed to build global manufacturing and commercial infrastructure makes it nearly impossible for most startup or mid-stage cell therapy companies to scale independently. According to Kite's Cindy Perettie, partnering with a large pharmaceutical company is a practical necessity for reaching global markets.