The following segment was excerpted from this fund letter published by Laughing Water Capital.
In the 1H'18 letter, we introduced Avid Bioservices (CDMO) to the partnership. At one time, Avid had been working on commercializing pharmaceuticals, but its core business is that of a contract drug manufacturing organization (CDMO - also its ticker). This is a recession-proof business characterized by switching costs that are very high. Specifically, when a pharmaceutical company seeks FDA approval for a drug, details on the manufacturing facility are included in the application. Changing manufacturing facilities thus requires FDA approval.