Generics Bulletin is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By

UsernamePublicRestriction

Centrient CEO Sees New Opportunities From Astral Acquisition

Rex Clements Sets Out Expectations For Integration Of Sterile Injectables Specialist

Executive Summary

Acquiring Astral SteriTech will open up significant new capabilities in sterile injectables for Centrient while also offering an opportunity to expand the reach of the Indian firm’s products through Centrient’s infrastructure, CEO Rex Clements tells Generics Bulletin in an exclusive interview.

Speaking with Generics Bulletin as Centrient announced this month that it had closed its deal to acquire Indian sterile injectables specialist Astral Steritech, Centrient CEO Rex Clements was clear on the transformative potential of the deal for the antibiotics, statins and anti-fungals producer.

“This is pretty fundamental for a few reasons,” Clements said of the acquisition that was announced earlier this year, which will allow the firm to diversify into sterile injectable antibiotics as well as bringing it a broader product portfolio and two US Food and Drug Administration-approved production lines. (Also see "Centrient Acquires India’s Astral SteriTech" - Generics Bulletin, 16 Feb, 2021.)

“Today, the core of the company is active pharmaceutical ingredient manufacturing, [with] enzymatic manufacturing technologies,” Clements set out. “And for a number of years, we have been moving slightly forward into finished goods, but mainly into oral solids which are used to treat community infections.”

“And when it comes to the institutional or hospital products, we are not present there except where someone is buying our API – they’re taking it and sterilizing it and selling it on to someone else to convert into finished goods.” But with the Astral Steritech deal closing, Clements summarized, “what this does is it basically gives us the sterile capability.”

“There is very little that we need to build, it’s more a case of putting it together and building the links up.”

“We still have some work to do to fully integrate that into our own supply chain,” he acknowledged, “but it gives us the B2B sterile capability to supply generic customers that are supplying hospitals.”

“We won’t go direct to hospitals, we won’t go direct to tenders, we will always go B2B,” Clements emphasized.

“So this opens a whole new segment for us of institutional infections, treatments in a hospital setting,” he explained. “This is an area where there are a lot of drug shortages, and I think having Astral enables us to really address the drug shortages. It is an area that is often under scrutiny for sustainable manufacturing, and the ability to bring our API there will help address antimicrobial resistance.”

Rex Clements, Centrient CEO  

Therefore, Clements indicated, the acquisition represented “a good building block on our finished-dose area, a good building block around new customers and segments, and also a forward move on our sustainability and AMR agenda.”

Asked whether any new infrastructure was needed to enable that B2B business to meet its full potential, he said that “part of it will leverage our existing infrastructure, in Europe and in Asia, and part of it will come with the acquisition, leveraging their infrastructure in India and also in the US.”

“So I think there is very little that we would need to build, it’s more a case of putting it together and building the links up.”

And when asked about whether there would be any changes in Astral’s management team alongside the acquisition closing, Clements confirmed that “there have been no management changes, the family is still closely involved, they are on contract with Centrient so we have had no management changes.”

“We will run it largely as a unit within [Centrient],” he elaborated, “but of course we will integrate it into our quality systems, our way of doing business, our commercial functions.”

Synergies Will Allow Centrient To Broaden Astral’s Reach

In terms of the specific benefits that Centrient would gain from operating the two businesses together, Clements said “I think most of the synergies are driven mostly by our commercial synergies, the ability to use our commercial teams, our regulatory teams with the Astral products to broaden the reach of the Astral products fairly quickly.”

“So we can go to existing customers with a broader suite of products today, and accelerate the commercial capabilities of the Astral products.”

Moreover, he said, “we have a regulatory team that can bring those products to market where Astral has not had the capability to move forward,” pointing out that “Astral has mainly been focused around the US, India, Asia markets.”

Another area that Clements highlighted around integration was “the part we are focusing on with Jay Patel, one of the family members who leads Astral. What we are doing is harmonizing quality systems. So we will implement our electronic quality management system, we are harmonizing our planning system and the supply chain system. So we are integrating that, [and] over time the finance systems within our India entity.”

Overall, Clements described, Astral “runs like a business unit within Centrient, but leverages the commercial focus more.” However, he did suggest that “as we go on, in future years, gradually we will bring our own supply chains on the API side into Astral. But that’s a much longer process.”

Antibiotics Sector Expected To Pick Up After Pandemic

Talking about the global market for Centrient’s products – and asked about the disruptions seen in the last couple of years in the context of the COVID-19 pandemic – Clements commented on how demand patterns for antibiotics and shortages in injectables were expected to play out.

“I think at the moment in antibiotics, it’s at a – I don’t want to say an all-time low, but if I go back in the data then probably the last two to three decades has always been higher demand than what we have now,” he conceded. But “we do see that turning, and we do see demand – especially in Europe and the US – picking up again.”

“We have our own internal forecasts on when we see the market returning to normal,” Clements said. And while he declined to share specific details, he said “we do see a trend that brings us back to normal in the not-too-distant future overall. But right now we are still on a downturn.”

This meant that “shortages have largely abated, especially in the institutional sector, which is an area in which we will now play, with Astral.” But this lack of shortages had not been linked with any change in industry capacity, he cautioned.

“We’ve got to bear in mind that there is no capacity that has been added in any significant way in the institutional sector,” Clements emphasized. “So my view, my expectation would be that shortages could return once demand returns to normal, in similar molecules as we’ve had in the past.”

“With Astral, we do have upside capacity, so as we embark on bringing more products to market I think there is an area where we can really work with our B2B customers in addressing some of the shortages in a more sustainable way, by working closely with them in longer-term contracts. So I think we can play a very nice role with the Astral business in addressing shortages in the market.”

“This pandemic was viral-driven. There’s no reason why the next one could not be bacteria-driven.”

Asked about the importance of more diverse sourcing (see sidebar), and whether this was still a major risk for the antibiotics sector, Clements said it “continues to be an important topic for various governments around the world, especially in the US. And I think it’s the right discussion. The importance of that sourcing is key and it is a message that needs to be heard.”

“Right now, this pandemic was viral-driven,” he said. “There’s no reason why the next one could not be bacteria-driven. And I think the importance of having diverse, robust antibiotic supply chains is absolutely key.”

“We see some stakeholders, some governmental stakeholders, moving stronger and faster than others, so I continue to see the risk, and we continue to work to shore up the supply chain.”

But at Centrient, he attested, “we ourselves are very diversified: we have three finished API supply points across the world. One in Asia, one in Europe, one in the Americas. So we are very diversely structured. And we hope that we will see more of that happening in the industry, because it will be important for future supply security.”

Asked whether governments now had a greater understanding of issues around diversity of supply as a result of pandemic experiences, and whether this had helped them to understand the complexities of the supply chain, Clements said “yes, I believe so.”

“There has been very strong outreach on understanding this, and this is still continuing,” he said, pointing to “for example in the US, the recent 100-day supply chain review.” (Also see "Overseas API Manufacturing Identified As Key Vulnerability In US Supply Chain" - Generics Bulletin, 16 Jun, 2021.)

“So we really see a level of understanding and depth emerging for key governmental stakeholders around the supply chain. I think the knowledge of the supply chain and its importance on the agenda is much higher than it was four or five years ago.”

Non-Price Procurement Criteria Becoming More Widely Recognized

On the question of whether governments were starting to give greater prominence to non-price criteria in procurement processes, Clements said that in western Europe “where it is more substitutable and generics driven,” there was “a very high level of focus…and definitely some markets have started giving prominence to criteria that are not just price-driven.”  (Also see "EU Pharma Strategy Will Remove Barriers And Bolster Competition" - Generics Bulletin, 25 Nov, 2020.)

“So we do see that happening, an understanding of what that means, understanding fully where the product was made and how it was made. So there is progress being made. It’s still probably not at the level it needs to be, but definitely we see progress in the large European generics markets.”

Asked whether environmental sustainability activities – a key area of interest for Centrient – were a big factor in these non-price criteria, he conceded “not as big as I’d like.”

“I think there is still more room to improve on non-pricing criteria and environmental sustainability, I think there is a big step that can still be made on this, especially in antibiotics and the way antibiotics are made,” he volunteered. “We strongly believe that the way they are made can be a key combatant to the emergence of AMR, and I would like to see a very clear statement around that in purchasing requirements.”

On AMR more widely, and the generics industry response, Clements was pressed on whether there was sufficient momentum in this area or whether a greater push was needed. “It is a little bit of both,” he suggested. “There is momentum there, but I believe the push can be stronger. I believe the momentum can accelerate. I think it will.”  (Also see "Industry Needs To Engage On Antimicrobials" - Generics Bulletin, 17 Jan, 2020.)

“Definitely for me this remains a very serious topic on many agendas, especially governmental stakeholders. But I’d like to see the push be a little stronger, [especially] the depth of understanding around supply chains and how antibiotics are used.”

“The best thing for us is that, while it’s good to have new and novel antibiotics, society needs to maintain the effectiveness of the set of existing antibiotics that we have,” Clements highlighted. “So to me there is still more that governmental stakeholders and also the industry can do around the subject.”

Consolidating Astral Before Further Expansion

Asked about the next major milestones for Centrient following the acquisition of Astral – and whether further M&A was on the horizon – Clements was clear on both his immediate and longer-term plans.

“I think for the next 6-12 months we will enter a consolidation phase as we integrate Astral,” he indicated. “That is to me paramount, to do that successfully and carefully. And while it’s tempting to want to expand quickly, it’s important that we spend the time really working well and making Astral a key part of Centrient going forward.”

Questioned on whether there were any gaps to fill in the overall business, particularly in terms of the geographic footprint, he observed that “we are pretty much global right now: as I mentioned on the institutional side Astral is heavily weighted to the US and sections of Asia and we will expand the commercial presence of Astral into other markets where Centrient is there. So really my focus now is expansion of the finished-dose institutional and non-institutional portfolio in the B2B sector, again only B2B.”

“And while the core API is pretty much global right now it’s more a case of expanding that in product derivatives around API, rather than additional regions or areas like that.”

Beyond the integration of Astral, he outlined, “for me the areas that we will work on are rounding out our portfolio, both in antibiotics and non-antibiotics. We’ve recently brought online a major statins expansion where we product atorvastatin and rosuvastatin, two of the most important statins, and we have just finished an investment in a new facility and that has just come online. So it’s ready to make first commercial batches and we are excited about that.”

“We have just completed an expansion of our facility in Mexico to increase the output of that facility. And along the way we continue to invest in these incremental improvements in the core business.”

And “one thing we are focusing on is more digitalization. The generic antibiotics business is around molecules that have been generic for a long time, and you often find a high lack of digitalization in the way it’s manufactured, the way it’s brought to market, the way companies are run. And to me, bringing digital tools and Big Data-driven decision-making into the company is key. And so that is a focus at Centrient.”

“But my anticipation is that it will probably be 6-12 months before we make any major big moves further.”

Related Content

Topics

UsernamePublicRestriction

Register

GB151274

Ask The Analyst

Ask the Analyst is free for subscribers.  Submit your question and one of our analysts will be in touch.

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel