How GLP-1s, Digital Tech, and 505(b)(2) Strategies Are Reshaping the CDMO Landscape

PharmTech recently spoke with Mike Stenberg, Vice President – Business Development, LGM Pharma, to get his perspective on trends that shaped pharmaceutical development and manufacturing in 2025 and where things are headed in 2026. In this part 2 of our three-part interview, Stenberg, explores the primary trends reshaping the pharmaceutical industry, specifically focusing on the transformative impact of GLP-1s, the practical integration of AI, and strategic shifts in drug delivery.

Stenberg identifies GLP-1s as a revolutionary force, likening their influence to the NASA moon program, for which innovations eventually spread throughout the entire sector. Beyond the medications themselves, this trend is accelerating the rise of digital health platforms, which allow manufacturers to deliver therapies directly to patients, effectively cutting out the middleman. Furthermore, GLP-1s are pushing boundaries in delivery science; the industry is moving toward oral solid doses with enhanced uptake, transdermal microneedles, and subdermal options to move away from traditional injections, Stenberg adds.

Regarding AI and digital technologies, Stenberg highlights their application within the CDMO space. AI is being leveraged to vet supply chains and identify predictive processes to prevent disruptions, he notes. On the production floor, it facilitates real-time, in-process testing and predictive maintenance to reduce equipment failure. However, full adoption faces hurdles, including the current lack of structured datasets and the slow pace of change within a highly regulated industry that requires updated SOPs and extensive retraining.

To maintain a competitive advantage against patent cliffs and rising generic competition, Stenberg points to the rapid growth of the 505(b)(2) market. This strategy involves repurposing existing APIs for new indications or utilizing specialized delivery methods, such as orally disintegrating tablets or suppositories. This approach allows companies to protect margins and "buy time" while developing new molecular entities. Success in this area requires finding specialized partners with the unique equipment necessary for non-standard formulations. Overall, Stenberg envisions an industry undergoing a fundamental transformation driven by technological integration and creative delivery solutions.

Watch part 1 of the interview with Stenberg here!

Transcript

Editor's note: This transcript is a lightly edited rendering of the original audio/video content. It may contain errors, informal language, or omissions as spoken in the original recording.

That all comes back to us, for example, or for our reality is really in the area of GLP-1s. So we've seen GLP-1s transform the entire industry and certainly what we're doing. That's an obvious answer, right? But when you scratch the surface a little bit, you see some other interesting developments.

One is that rise of digital health platforms. And so now we have the capability, or now there exists the capability, to deliver a therapy directly from the manufacturer or the drug company to the patient and cut out the middleman. That has been wildly popular and adopted quickly by the populace.

We've seen around GLP-1s, even the brands have started to try and do that and put together deals with digital health platforms. Some of those were successful, some of those weren't, but that system has caught on, for its ease and for sufficiency and for the speed associated with it. We don't see that going away.

Of course, GLP-1s have also created innovation in development too. They're an injectable product. People would like to move away from that. So we see this development around oral solid dose, but along with that, you need to enhance the uptake of that API in the GI system. So we see innovation around uptake enhancers being added to the oral solid dosages.

We're seeing emphasis on how we can deliver that drug differently than an oral solid dose or an injection. Can we do it transdermally? Can we do it transdermally using microneedles? Can we inject it subdermally? All of that development is going on right now, and then there's a whole attendant, microsphere of companies who are not making GLP-1s, but they're developing drugs that mitigate some of the effects or the negative effects of GLP-1s, like muscle wasting or nausea. So I think we're gonna look back at the advent of GLP-1s and we are seeing that happening now, and I think it's gonna transform the entire industry.

All the innovation going on in and around GLP-1s and in that space will eventually spread out to the entire pharmaceutical sector. It reminds me of the NASA program, all the innovations that came out of sending man to the moon spread throughout society and around the world as new innovations.

We've heard a lot about AI helping in the drug discovery process and speeding that up, but in our particular industry, the CDMO industry, we're seeing AI being used for things like helping to vet your supply chain and identify potential predictive processes, trying to predict potential supply chain disruptions in the future.

But we also see it down on the production floor as well. It gives us the ability to do real-time, in-process testing as you're manufacturing a product. It gives us the ability to start predicting potential equipment failures or deviations and avoid those, or sharply reduce those kinds of effects.

So we also see it again in the supply chain, helping us identify robust suppliers and potentially identify disruptions to the supply chain and prevent them from happening. So it has a lot of real-world applicability to the CDMO industry. But there are definite barriers to implementation. One of them is AI models rely on large, well-defined, well-structured database sets from which they can learn. Those database sets aren't very pervasive in our industry today. They're quickly being developed, but that takes time to do, and once that's done, there's also a large installed base of existing equipment and existing processes. All of those will need to be changed and updated.

We're a highly regulated industry. You can't just make a change on a turn on a dime. You have to rewrite SOPs, you have to retrain everybody. So it's gonna slow the uptake of, or adoption of, of AI. I don't think it's gonna stop it, but it's definitely gonna slow it.

What we see really exploding is the entry into the 505(b)(2) market, taking an existing API, finding a different indication for it, delivering it by a different route or in a different dosage form. And that, of course creates some interesting challenges. If you are going to take an existing API and use it in a different way, and you're not the original brand, once again, you're back to the supply chain.

You have to source the API, and you have to secure your supply chain, but then the other thing you have to do is come up with a way to different dosage delivery forms. I mean, if the typical delivery form is an oral solid dose or it's an injection, now companies are looking at things like orally disintegrating tablets, for example, or the use of suppositories. In both cases, though, that means, because they're not standard dosage delivery forms, you have to find a partner who has experience in formulating oral disintegrating tablets or formulating suppositories. Once you've figured out how to formulate it, then you have to manufacture it.

The manufacturing of an oral disintegrating tablet is similar, but different in very distinct ways, from manufacturing a tablet. And of course, with a suppository, you need a very specific and unique set of equipment to manufacture suppositories as well. So finding partners who can help you do that is a bit of a challenge, but we're seeing the rise in explosion of the 505(b)(2) market is incredible. And what that does for our clients is it buys them some time as well. They can maintain their margins, they can maintain some of their revenues, and it buys them time to bring their new molecular entities or new APIs to market to develop those.