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Catalent's (CTLT) Latest Facility Expansion to Boost Capacity

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Catalent, Inc. (CTLT - Free Report) announced that it commenced a $175-million project to expand its flagship U.S. manufacturing facility for large-scale oral dose forms in Winchester, KY. The facility expansion, which is expected to be completed by January 2024, is expected to significantly add to the site’s manufacturing footprint.

Notably, the latest expansions follow a doubling of the site’s footprint in 2015 and a $40-million investment in 2019, which saw equipment installation for stick pack dosage manufacturing, integrated packaging lines, and expanded roller compaction and fluid bed capacity.

The expansion of the manufacturing facility is expected to significantly strengthen Catalent’s foothold in the global Softgel & Oral Technologies space.

Significance of the Expansion

Catalent’s latest expansion of its manufacturing facility will likely broaden the site’s highly potent material handling capabilities and containment vault, and provide additional laboratory space. It is expected to add further capacity for existing turnkey operations, including dual fill encapsulation and pan coating, beside various packaging solutions and analytical services.

Per management, the company has been registering a broad increase in the manufacturing demand. The nature of the development pipeline, being strong in both oncology treatments and complex molecules, requires the expansion of specific capabilities in areas such as highly potent materials handling. Management expects the latest expansion to meet the current and future needs of Catalent’s customers.

Industry Prospects

Per a report by Future Market Insights, the global oral solid dosage pharmaceutical formulation market is projected to grow from $493.2 billion in 2017 to $926.3 billion by 2027-end, witnessing a CAGR of 6.5%. Factors like oral solid dosage forms being cost-effective and easy to manufacture, trouble-free packaging and transportation, and increased chemical and physical stability are likely to drive the market.

Given the market potential, the latest site expansion is expected to provide a significant boost to Catalent’s business globally.

Recent Developments

This month, Catalent introduced its UpTempo Virtuoso platform process. The platform is designed for the development and CGMP (current good manufacturing practices) manufacturing of adeno-associated viral vectors.

In April, Catalent announced that it completed a significant expansion of its nasal capabilities at its Morrisville, Research Triangle Park (RTP), NC-based facility to provide improved services for the development and manufacturing of unit and bi-dose nasal spray products.

The same month, Catalent acquired Erytech Pharma’s commercial-scale cell therapy manufacturing facility in Princeton, NJ. The deal includes an exclusive long-term supply agreement for Catalent to support Erytech’s lead product candidate, eryaspase (GRASPA), which is currently in late-stage development to treat acute lymphoblastic leukemia.

Price Performance

Shares of the company have lost 2.3% in the past year compared with the industry’s 31.1% decline and the S&P 500's 7.7% fall.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank & Key Picks

Currently, Catalent carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Omnicell, Inc. (OMCL - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) .

Omnicell, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Omnicell has lost 18.5% compared with the industry’s 43.9% fall over the past year.

Patterson Companies has an estimated long-term growth rate of 9.9%. PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 2.7%. It currently carries a Zacks Rank #2 (Buy).

Patterson Companies has lost 7.9% compared with the industry’s 6.9% fall over the past year.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average beat being 15.6%. It currently sports a Zacks Rank #1.

AMN Healthcare has lost 1.8% compared with the industry’s 63% fall over the past year.

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