Rovi Expands Manufacturing Capabilities with $250M BMS Facility Acquisition and Production Deal

Laboratorios Farmacéuticos Rovi, the Spanish contract development and manufacturing organization (CDMO), has significantly bolstered its production capacity through a landmark agreement with Bristol Myers Squibb (BMS). The deal, valued at $250 million, involves the acquisition of BMS's Phoenix facility and establishes a five-year manufacturing partnership between the two companies.

Facility Acquisition and Expansion

The centerpiece of this transaction is Rovi's acquisition of BMS's state-of-the-art production facility in Phoenix, Arizona. This 34,000-square-meter (366,000-square-foot) site substantially expands Rovi's manufacturing capabilities, particularly in high-demand areas such as high-potent cytotoxic products, vaccines, obesity drugs, monoclonal antibodies, biosimilars, and antibody-drug conjugates.

The facility, which has received approvals from regulatory bodies including the FDA, European Medicines Agency, and Japan's drug regulator, has been the recipient of approximately $100 million in investments from BMS since 2021. Further enhancing its value, the site is scheduled to add a new prefilled syringe line in 2027, which will increase its production capacity.

Manufacturing Agreement and Financial Terms

As part of the deal, Rovi has secured a five-year manufacturing agreement with BMS. This arrangement guarantees Rovi a minimum annual revenue of $50 million over the contract period, during which the CDMO will continue to produce products for BMS.

While the specific cost of the Phoenix plant acquisition was not disclosed, Rovi described it as "not material" to the company's finances. The transaction is expected to close in the first half of 2026, subject to customary conditions precedent.

Strategic Implications and Industry Context

This acquisition marks a significant step in Rovi's growth strategy, particularly following its rise to global prominence during the COVID-19 pandemic. The company's partnership with Moderna for the production of the mRNA-based vaccine Spikevax catapulted it into the international spotlight. In 2022, Rovi and Moderna expanded their collaboration with a 10-year agreement covering not only Spikevax production but also Moderna's pipeline of mRNA vaccines for respiratory syncytial virus and influenza.

However, like many CDMOs, Rovi has faced challenges as pandemic-related demand waned. Earlier this year, the company warned analysts that its 2024 profit estimates were 10% to 15% too high, primarily due to reduced activity in its contract manufacturing business. This latest deal with BMS appears to be a strategic move to diversify and strengthen Rovi's manufacturing portfolio, potentially offsetting some of the post-pandemic slowdown.

The acquisition also comes in the wake of speculation about potential buyouts of Rovi's CDMO business. In October of last year, the company reaffirmed its commitment to retaining its manufacturing group, citing "the strength, momentum and prospects of this business." This latest expansion seems to underscore that commitment and Rovi's confidence in the long-term value of its CDMO operations.