Agilent’s integration of recently acquired Biovectra remains a work in progress

Six months after Agilent Technologies completed its $925 million acquisition of Biovectra, a Canadian contract development and manufacturing organization (CDMO), the integration remains a work in progress, according to company executives.

“We deployed a billion dollars of capital with Biovectra in the CDMO business,” Agilent CEO Padraig McDonnell said earlier this month at TD Cowen’s Annual Health Care Conference, noting that the company is “very happy” with how the integration is going.

At the same time, McDonnell said there was “a lot of work” in its first-quarter fiscal year 2025 bringing Biovectra “up to the same standards” as Agilent’s Nucleic Acid Solutions Division (NASD), which has two cGMP facilities in Boulder and Frederick, Colorado.

“When you acquire a new company and you have a CDMO capability within NASD, you have to bring it up to the same standards — so there was a lot of work there in the first quarter, which really I think created a little bit of softness,” McDonnell told the TD Cowen conference.       

While the Biovectra acquisition is expected to deliver double-digit return on invested capital by year five, Agilent in its first-quarter fiscal year 2025 financial results last month reported that the Canadian CDMO brought in $26 million in Q1 sales, slightly lower than expected.

Simon May, president of Agilent’s Life Sciences & Diagnostics Markets Group, told analysts on a Feb. 26 earnings call that “we were slightly soft on revenue” in Q1, as the company brought certain aspects of Biovectra’s operations “up to the Agilent/NASD standards” in terms of process and quality — which he said is progressing well.  

“As we are going through the integration process with Biovectra, we’re increasingly excited about what we’re seeing there,” May said. “The more we get under the hood, the more the capabilities that we have there are resonating with our internal experts — and, also, with our customers. We think it’s still very early inning.”

Andrew Mitchell, senior director of business development at Biovectra, told Pharma Manufacturing last week that since the closing of the acquisition in September, Agilent took time for a “deeper dive” into the Canadian CDMO and earlier this year “announced to us that they saw this opportunity would be a long integration period.”

The integration has started initially with “finance, HR, and all those parts that were part of the corporate Agilent — but the other parts would remain independent,” according to Mitchell. Biovectra remains “a little bit autonomous still at the moment,” he said. “The longer-term plan, of course, is to integrate. But it will take a probably two- to three-year process to do that.”       

Biovectra’s ‘sweet spot’     

McDonnell earlier this month at the TD Cowen conference described Biovectra’s capabilities as being in the “sweet spot” of capacity constraints, building on Agilent’s CDMO specialization in oligonucleotides and CRISPR therapeutics by expanding its portfolio of services with sterile fill-finish and rapidly growing modalities such as antibody-drug conjugates (ADCs) and GLP-1s.

With the acquisition of Biovectra, Agilent acquired “state-of-the-art” sterile fill-finish capabilities at Biovectra’s Prince Edward Island, Canada site — as well as microbial fermentation competencies — providing a footprint in peptide therapeutics and GLP-1s specifically for clinical-to-commercial scale production.

“You think about GLP-1 peptides. You think about ADCs and some of our microbial fermentation capabilities. We’re right in a constrained environment,” McDonnell told the TD Cowen conference. “We have a lot of significant customers working on clinical product that will move to commercial. We’re very bullish about it, not only this year, but the years beyond in what we’re seeing on the demand — and demand is extremely strong.”

According to Agilent, it has added more than 100 new customers due to its Biovectra acquisition. The company expects Biovectra and NASD to be a $1 billion-plus revenue opportunity by 2030.

When it comes to GLP-1s, McDonnell told the TD Cowen conference that Biovectra is “involved in two of the biggest GLP-1 precursors, and also next-generation GLP-1s,” with “a lot of runway” ahead coupled with Agilent’s NASD business — which, he said, includes “the analytical side where we’re in a lot of the sites around some of the key companies.”      

At the same time, McDonnell downplayed the tariff risk to Agilent’s business, despite President Donald Trump’s threatened tariffs on Canada, among other countries. He told the TD Cowen conference the impact is “negligible” on Agilent with “very little to mitigate.”

During a Feb. 26 earnings call on first-quarter fiscal year 2025 financial results, McDonnell told analysts Agilent has a “diversified supply chain with a manufacturing presence in all major regions of the world” and the company has already taken action to mitigate the potential impacts of tariffs on its business. “In Canada, we do have manufacturing with Biovectra but its 30%, I think, is put into the U.S.,” he said.      

Mitchell told Pharma Manufacturing that on a macroeconomic level the geopolitical situation is “causing some disruption to supply chains” given the globally connected biopharma industry.

“There are clearly some short-term issues which have to be addressed,” Mitchell said. “But I think, overall, there are some very exciting things happening in terms of the GLP-1 space and ADC space. There are clearly some tailwinds that are helping us to grow.”