In an interview with In Vivo, Rentschler Biopharma CEO Benedikt von Braunmühl discussed the contract drug manufacturing organization’s recent strategic decision to exit the cell and gene therapy manufacturing space, while doubling down on its core antibody business.
The chief executive explained the market dynamics driving this move and also discussed the impacts on geopolitical shifts, shared his insights on trends in biologics, the company’s AI implementation and workforce challenges.
Rentschler recently made what seems like a significant decision to exit the cell and gene therapy manufacturing area. What drove this move?
When I joined Rentschler about a year and a half ago, we conducted a comprehensive strategic review of our position in the market. While numerically there are more new modalities being developed than classical antibodies, a deeper analysis revealed concerning patterns.
Take AAV (adeno-associated virus)-based gene therapies as an example. Of 648 gene therapies in development, nearly half (302) were in preclinical stages, with only 36 in Phase I, 104 in Phase II, 19 in Phase III, and just six launched products. There's a clear Phase I gap – projects simply aren't advancing from preclinical to clinical phases.
This bottleneck stems from funding challenges, but also growing doubts about commercialization viability. These highly targeted treatments, while excellent for patients, often cost $500,000 to $1m per patient annually. Questions remain about payer acceptance, market access strategies, and physician/patient adoption.
Additionally, for a CDMO like us, volume business is critical. Cell and gene therapies are so individualized that we'd never achieve the necessary scale behind specific projects. Meanwhile, the monoclonal antibody (MAb) market continues to show strong growth potential, with bispecifics, multi-specifics, and antibody-drug conjugates (ADCs) expanding.
Looking at projections, by 2028 approximately 89% of the biologics market will still be antibody-based products, with new modalities (RNA, DNA, cell and gene therapies) representing only about 11%. Our expertise and track record lie in helping clients with complex molecules and optimization – particularly in multi-specific antibody development and production.
Rather than continuing to invest in emerging platforms that might take decades to become profitable, we decided to focus on our core strengths now and potentially partner with or acquire established platforms later.
What financial impact will this exit decision have on Rentschler?
The financial impact is less significant than you might expect. We had rented a facility rather than building or buying anything substantial and employed about 40 people at the site. We'll cancel the lease contracts, and the equipment could potentially be sold. The financial impact won't be drastic – certainly less than what we would have spent continuing in that business over the coming years.
You mentioned antibody-drug conjugates (ADCs). Is Rentschler moving into this space?
ADCs have a complicated value chain, especially regarding the payload and chemotherapy components, which are highly toxic and require specialized production sites. Currently, we can supply the antibody component, and we're analyzing how to potentially expand our offering in this area as part of our strategic roadmap. Nothing has been decided yet, but it's definitely an interesting sector with limited global production capacity.
What broader trends are you seeing in the biologics market?
It's fascinating to look at the evolution of this market. Biologics really emerged in the 1990s with interferons, followed by antibodies later in the decade. Between 2002 and 2017, the top antibody products grew approximately 400%.
Today’s funding environment shows mixed signals. While overall funding peaked in 2021 and dropped afterward, we’re seeing divergent trends by modality. Funding for biologics continues to grow steadily, which is positive for our core business. Meanwhile, cell and gene therapy funding continues its broader decline, though discovery-stage funding in this sector has bounced back somewhat in 2024 compared to 2023. It’s approximately double the 2023 level, but still only about half of what we saw during the 2020-2021 peak.
We're also seeing ongoing acquisition activity in the biologics space. As one big pharma CEO noted years ago, “99% of our innovation comes from outside.” With patent cliffs approaching, large pharma companies will continue acquiring innovative biotech firms, including those developing novel biologics.
What trends are apparent in the CDMO industry?
I personally don't believe we'll see massive consolidation in the CDMO market. The pace of innovation is simply too rapid. The most important trend in this sense is precision medicine. What was once considered a single indication like breast cancer now has dozens of distinct treatments. This means smaller patient populations for each medication, requiring less volume for both clinical trials and market supply. At the same time, molecular complexity is increasing, requiring greater expertise to optimize manufacturing processes.
This trend toward precision medicine works against massive CDMO consolidation. Some believe combining everything – CDMOs, CROs (clinical research organizations), and other services – is the right approach, but I disagree. If you try to do everything, you risk doing nothing well. That’s why we believe in maintaining our focus on drug substance manufacturing, where we have 50 years of experience. As treatments become more targeted and complex, specialized expertise becomes more valuable than scale alone.
We live in turbulent times. How might tariffs, Chinese manufacturing dynamics, and the changing geopolitical landscape affect Rentschler?
For now, we don't see a significant impact from tariffs on our drug substance business. Potential future tariffs would more likely affect finished products being imported to the US. Approximately 90% of our materials can be sourced locally in both the US and Europe, so we don't anticipate supply shortages.
Regarding Chinese competition, there was significant concern early last year, but recent information suggests the regulations around contracting with Chinese firms have been softened. Rather than preventing approval of products manufactured by Chinese companies, it appears the focus is more on public funding restrictions for companies using Chinese-produced products.
Nevertheless, uncertainty in the market has led potential clients of Chinese manufacturers to look elsewhere, which has been an advantage for us. We've seen increased requests for US production at our facilities, reflecting both deglobalization trends and lingering concerns about China. We've gained opportunities to discuss our capabilities with new potential clients, with some signing contracts and others waiting to see how the situation develops.
How is Rentschler implementing automation and AI into operations?
We’re constantly working to optimize operations through automation, but we're about 10 years behind the automotive industry in terms of achieving full automation. We do have a dedicated task force developing software solutions that enable equipment integration and automated data delivery to clients. While many of our processes like cell growth in fermenters are already automated, certain aspects still require human judgment to monitor parameters like gas levels.
In terms of AI, looking ahead we see significant potential for AI in our operations. Our future AI roadmap focuses on three key areas: optimizing manufacturing scheduling, deploying predictive analytics to anticipate production issues before they occur, and integrating data across the production chain from cell growth to purification to enhance process efficiency. We're particularly interested in AI's ability to analyze the vast datasets our bioreactors generate, identifying patterns that human operators might miss. While biological processes like cell growth have natural limitations that can't be accelerated, we believe AI can help us optimize everything surrounding these critical steps.
At the same time, we're preparing for a more immediate AI impact from our clients' side – as pharmaceutical companies implement AI to streamline clinical trials and patient recruitment, potentially shortening development timelines by months, this could create new demands for CDMOs like us to deliver products faster while maintaining quality, in turn driving our own AI adoption timeline.
In an earlier interview with In Vivo, you talked about facing challenges in talent recruitment and retention? Do those same challenges still exist?
These challenges still exist. In Germany, we're part of the "Bio Cluster South" where many biotech companies compete for talent. In the US, particularly in the Boston area, average salaries are significantly higher than in Germany, so people are attracted to the US and move between companies in the US more readily.
Despite this, we've seen a remarkable improvement in our US retention rates. Our team there reduced attrition from around 30% to single digits, which is unusual for the US market. We achieved this through improved communication, an open-door policy, organizational stability and consistent transparency about both our successes and challenges. Ultimately, it comes down to leadership and building trust by consistently demonstrating that your actions match your words.
