Tipping the Scales in Manufacturing Investment - Pharmaceutical Technology

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Tipping the Scales in Manufacturing Investment
The pharmaceutical majors invest in biologics production capacity as they advance restructuring programs and build their pipelines

Pharmaceutical Technology

Table II: Top 50 pharmaceutical companies (Rankings 41–50)
Novartis. Novartis (Basel, Switzerland) is implementing its "Forward" initiative, a program announced in December 2007 that is designed to achieve pretax annual cost savings of $1.6 billion by 2010. The program involves site closures and eliminating approximately 2500 full-time equivalent positions. As part of that initiative, some consumer-health division's product supply chains will be restructured to optimize capacity utilization. Research activities in the Novartis Institutes for BioMedical Research (NIBR) in Vienna and Tsukuba, Japan, will be phased out during 2008, and those facilities will be closed.

Also, in 2007, Novartis divested its Gerber baby food business to Nestlé (Vevey, Switzerland) for $5.5 billion, the final step in a divestment program to focus the group's strategy on healthcare and pharmaceuticals. Novartis had earlier sold its medical nutrition business to Nestlé for $2.5 billion. Novartis also sold its rights and transferred a related manufacturing facility for "Betaseron" (interferon beta-1b) to Bayer Schering Pharma (Berlin) for $200 million and received rights to manufacture its own version of Betaseron beginning in 2009.

Novartis has two major biologics expansions underway. The company is investing $700 million in a new cell-culture production facility in Singapore to support clinical and commercial production of biopharmaceuticals, primarily antibodies. The proposed facility is expected to be operational in 2012 and represents Novartis's single largest investment in manufacturing capacity in the company's history. Also, in 2007, Novartis began work on its $600-million cell-culture manufacturing site in Holly Springs, North Carolina. In addition, the company formed a new biologics unit.

Also in 2007, Novartis completed a new $180-million tablet-manufacturing plant in Singapore. The plant is expected to be fully operational in 2009. The company invested $153 million in its production facility in Grimbsy, United Kingdom, and an additional $123 million in its production facility in Basel-Schweizerhalle, Switzerland, to increase capacity to support production of "Tekturna"/"Rasilez" (aliskiren). The Ciba Vision business unit of Novartis's consumer-healthcare business opened a new $131-million manufacturing facility in Johor, Malaysia. The facility will produce the company "Air Optixo/O2Optix" breathable contact lenses.

In April 2007, NBIR opened a 5000-m2 R&D center in Shanghai, and plans to build a larger 40,000-m2 R&D facility there that will house roughly 400 R&D scientists. An initial investment of $100 million was budgeted for the two facilities.

In June 2008, Novartis agreed to buy Protez Pharmaceuticals (Malvern, PA) for $100 million up-front and as much as an additional $300 million. With the acquisition, Novartis gains the North American and European rights to PZ-601, a carbapenem antibiotic in clinical development. In April 2008, Novartis agreed to acquire a majority stake in the eye-care company Alcon (Hunenburg, Switzerland) under a two-step purchase plan. The first step involves Novartis buying a 25% stake in Alcon for $11 billion, which is expected to be completed in the second half of 2008. The second step provides rights for Novartis to acquire from Nestlé, Alcon's parent company, the remaining 52% held by Nestlé between January 2010 and July 2011 for as much as $28 billion. In July 2007, Novartis formed a strategic alliance with Intercell (Vienna), a vaccines developer, and increased its stake in the company to 16.2%.


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