PCI Pharma's Strategic Evolution: A CDMO Giant Seizes Biopharma Growth?

Partners Group's partial exit from PCI Pharma Services marks a pivotal moment for the CDMO (Contract Development and Manufacturing Organization) sector. After a nearly decade-long partnership, the private equity firm is stepping back from majority control while retaining a minority stake—a move that underscores both PCI's achievements and its future potential. For investors, the transaction raises critical questions: Is PCI positioned to capitalize on secular tailwinds in biopharma? And what does Partners Group's reinvestment signal about the company's growth trajectory?

From Packaging to Biologics: PCI's Strategic Pivot

When Partners Group acquired a majority stake in PCI Pharma in 2016, the firm was a mid-sized commercial packaging company with limited technical depth. Over the past decade, under Partners Group's stewardship, PCI has undergone a radical transformation. Today, it is a global CDMO with expertise in high-margin areas like biologics manufacturing, sterile fill-finish services, and advanced drug delivery systems. This shift aligns with a broader industry shift: the biopharma sector's $300+ billion R&D spend annually now prioritizes complex therapies—such as monoclonal antibodies and gene therapies—that require specialized manufacturing capabilities.

The numbers tell the story: PCI now operates 38 sites across seven countries, employs 7,500+ staff, and has executed 450+ product launches in five years. Its recent focus on biologics and clinical trial support services has been a key growth lever. The company's ability to scale these capabilities has drawn in new investors like Bain Capital and Kohlberg & Company, which will lead the consortium acquiring the majority stake. Partners Group's decision to retain a minority position—reinvesting €18 million—suggests confidence in PCI's ability to capitalize on its repositioning.

The Tailwinds Fueling CDMO Demand

PCI's growth is not an isolated phenomenon. The CDMO sector is a beneficiary of three powerful secular trends:
1. Rising Complexity of Drug Development: Over 70% of new molecular entities approved by the FDA in 2024 were biologics or advanced therapies, which require specialized manufacturing.
2. Outsourcing Surge: Big pharma companies are increasingly offloading non-core functions like manufacturing to CDMOs to reduce costs and accelerate time-to-market.
3. Geopolitical Diversification: Post-pandemic supply chain reshuffling has driven demand for CDMOs with global footprints, like PCI's, to mitigate risks.

These trends are reflected in sector growth: The global CDMO market is projected to hit $150 billion by 2028, growing at a 9% CAGR. PCI's expansion into biologics and sterile manufacturing—critical for high-value drugs—positions it to capture this upside.

Risks and Red Flags for Investors

Despite the positives, PCI faces significant hurdles. First, competition in the CDMO space is intensifying. Giants like Lonza and Catalent have deep pockets and scale advantages. PCI's smaller size—though still substantial—may limit its ability to compete on price in commoditized segments. Second, regulatory risks loom large: Biologics manufacturing requires adherence to stringent FDA and EMA guidelines, and a single misstep could damage client trust.

There's also the question of overexpansion. PCI's reinvestment plans include new facilities and capacity upgrades—moves that could strain operational execution. Finally, the company's reliance on a handful of large pharma clients (a common issue in the sector) creates concentration risk. If a major partner shifts sourcing strategies, PCI's margins could suffer.

Partners Group's Exit: A Vote of Confidence—or a Prudent Exit?

Partners Group's partial exit is notable for two reasons. First, the firm's €83 million stake is being sold at a valuation aligned with its carrying value as of May 2025—a signal that returns for its investors have already been realized. Second, its reinvestment in a minority stake suggests it still sees PCI as a high-potential asset but wants to reduce its direct risk exposure. This is a classic private equity “double-down on winners” move: secure profits on the initial investment while retaining upside through a smaller stake.

For investors, the takeaway is clear: PCI's growth story is credible, but it's not without execution risks. The new owners—Bain Capital and Kohlberg—bring operational expertise in scaling industrial services businesses, which could be a net positive. However, the deal's dependency on regulatory approvals (it's subject to clearance in the second half of 2025) adds near-term uncertainty.

Investment Implications

Direct investment in PCI is off the table for most retail investors, as it's a private company. However, the CDMO sector's growth makes it a sector to watch. Publicly traded peers like Lonza (LONN.SW), Catalent (CTLT), and Thermo Fisher Scientific (TMO) offer exposure to similar tailwinds. For those willing to consider private markets, PCI's partnership with Bain and Kohlberg could attract institutional investors seeking high-growth industrial services plays.

Another angle: PCI's focus on biologics and sterile manufacturing overlaps with trends in mRNA and gene therapy production—areas where companies like Moderna (MRNA) and BioNTech (BNTX) are expanding. Investors might pair exposure to PCI's sector with positions in firms enabling these therapies.

Final Take

PCI Pharma's evolution from a regional packaging firm to a global CDMO leader is a textbook example of strategic reinvention. The transaction with Bain and Kohlberg signals that PCI is now a mature, scalable business capable of thriving in a high-demand sector. While execution risks remain, the company's positioning in biologics—a $200 billion+ market—gives it a strong foundation. For investors, PCI's story is a reminder that in healthcare, the winners are those who can adapt to the shift toward complex, life-saving therapies.

The next 12–18 months will be critical: regulatory approvals, new facility launches, and client wins will test PCI's operational mettle. If it can deliver, this could be a generational opportunity in the CDMO space.