Big Pharma's Manufacturing Blueprint for the Future

August 2, 2011
Patricia Van Arnum
Pharmaceutical Technology
Volume 35, Issue 8

The pharmaceutical majors continue rationalizing manufacturing capacity in established markets as they forge their manufacturing networks in biologics and emerging markets.

The pharmaceutical majors manufacturing activities in 2010 and 2011 to date have been marked by several common themes: ongoing restructuring and select investment in biologic-based manufacturing, particularly vaccines, and emerging markets. China and India continue to be targets of investment, particularly through alliances or joint ventures, and investments are being made in Russia and Brazil as well.

IMAGE: DINN / GETTY IMAGES

Company activity

Pfizer. Pfizer is continuing a restructuring of its manufacturing network, which was announced in May 2010, as part of its integration plan following its $68-billion acquisition of Wyeth in 2009. As of Dec. 31, 2010, Pfizer operated plants in 76 locations on a global basis with major manufacturing facilities in Belgium, China, Germany, Ireland, Italy, Japan, the Philippines, Puerto Rico, Singapore, and the continental United States. The company's plant network strategy calls for the exit of nine sites during the next several years, according to the company's 2010 annual filing with the US Securities and Exchange Commission (SEC).

Pfizer's strategy, as detailed in May 2010, includes plans to discontinue operations at three solid-dosage sites in Caguas, Puerto Rico; Loughbeg, Ireland; and Rouses Point, New York. Pfizer also announced plans to phase out pharmaceutical solid-dosage manufacturing in Guayama, Puerto Rico, but that site will expand its consumer-healthcare operations. Reductions are planned at two other solid-dosage facilities in Illertissen, Germany, and Newbridge, Ireland.

Table I: Top 50 pharmaceutical companies (Rankings 1–25).

Two aseptic facilities that make sterile injectable medicines were targeted for exit: Dublin, Ireland, and Carolina, Puerto Rico. Pfizer also announced changes to its biopharmaceutical-manufacturing network. The company said it planned to exit operations in Shanbally, Ireland, and Pearl River, New York. The Pearl River site, however, will remain Pfizer's center of excellence for vaccine research and development (R&D). Biotechnology plants in Sanford, North Carolina, Andover, Massachusetts, and Havant, United Kingdom, are expected to see reductions.

Table II: Top 50 pharmaceutical companies (Rankings 26–50).

Pfizer reported plans to cease production of consumer-healthcare products at its plant in Richmond, Virginia, but consumer healthcare R&D operations will continue in Richmond. The timing of specific exits will depend upon the complexity of operations, the amount of time needed for product transfers, and other business requirements, said Pfizer in a May 2010 press release.

In outlining the changes to its manufacturing network, Pfizer also summarized how its transformed manufacturing network will look. Pfizer's solid-dosage network will include plants in Freiburg, Germany; Amboise, France; Vega Baja and Barceloneta, Puerto Rico; Ascoli, Italy; Newbridge, Ireland; and Illertissen, Germany. Its aseptic-manufacturing network will consist of plants in Puurs, Belgium; Perth, Australia; Catania, Italy; and Kalamazoo, Michigan. Its biotechnology-manufacturing network will consist of sites in Grange Castle, Ireland; Strangnas, Sweden; Algete, Spain; Havant, United Kingdom; Andover, Massachusetts; and Sanford, North Carolina. The consumer healthcare network will include plants in Guayama, Puerto Rico; Montreal, Canada; Albany, Georgia; Aprilia, Italy; Hsinchu, Taiwan; and Suzhou, Jiangsu, China.

Pfizer added to its manufacturing network in February 2011, when it acquired the specialty pharmaceutical company King Pharmaceuticals. As of December 2010, King Pharmaceuticals had manufacturing facilities in Bristol, Tennessee; Rochester, Michigan; Middleton, Wisconsin; and St. Petersburg, Florida, as well as an auto-injector manufacturing facility in St. Louis, according to King Pharmaceuticals' 2010 SEC annual filing.

Pfizer is further expanding its manufacturing position in emerging markets, principally through alliances. In China, Pfizer signed a memorandum of understanding (MOU) with Zhejiang Hisun Pharmaceutical in July 2011 for a possible joint venture, which will include manufacturing cooperation, local and global sales and marketing infrastructure, and R&D of off-patent medicines. In April 2011, Pfizer signed an MOU with Shanghai Pharmaceutical for a potential partnership for the registration and commercialization of innovative Pfizer products in China. The companies also are examining cooperation in distribution, commercialization, R&D, manufacturing, and equity investment. In South America, Pfizer acquired a 40% stake in Laboratório Teuto Brasileiro a generic-drug company in Brazil in November 2010.

Sanofi. In 2010, Sanofi invested nearly EUR 1.2 billion ($1.72 billion) to increase capacity and improve productivity at various production and R&D sites, according to the company's 2010 SEC annual filing. In Europe, the company invested in two new production lines at its facility in Frankfurt for Lantus (insulin glargine). The company also invested in its Brindisi, Italy, site to expand production of spiramycin, the active ingredient of the antibiotic Rovamycin. In the US, the company is investing in epiCard, a gas-powered single dose, single-use autoinjector with audible user instructions for injecting of epinephrine, which is indicated for treating severe allergic reactions.

In France, Sanofi is proceeding with its Biolaunch project, which is designed to convert its chemical production facilities to biotechnology-based ones. The project includes a plan for a production facility for monoclonal antibodies at its site in Vitry-sur-Seine, which is expected to be completed by 2012, plus further investments to create a new biosynthetic process at its sites in Elbeuf and Vertolaye to improve corticosteroid production competitiveness.

Sanofi has several projects in emerging markets. In China, the company is expanding its manufacturing facility in Beijing by installing assembly and packaging lines for SoloStar, a prefilled injection pen used to administer the company's Lantus insulin product. In Hangzhou, China, Sanofi is building a new manufacturing site, scheduled to be completed in 2012, to replace an existing manufacturing facility there. In Russia, Sanofi is increasing insulin capacity at its facility in Orel; the company obtained the facility following its acquisition of a controlling stake in the pharmaceutical company Bioton Vostok in 2010. In Latin America, Sanofi is expanding its vaccine-manufacturing operations in Mirador, Argentina.

Sanofi has made several acquisitions to increase its presence in emerging markets. The company gained industrial sites from its 2009 acquisitions of generic-drug companies Zentiva in Eastern Europe and Medley in Brazil. In August 2010, sanofi also acquired Nepentes, a Polish manufacturer of pharmaceuticals and dermocosmetics. In October 2010, Sanofi acquired a 60% equity interest in the Chinese consumer-healthcare company Hangzhou Sanofi Minsheng Consumer Healthcare in partnership with Minsheng Pharmaceutical. Sanofi also acquired the Chinese specialty pharmaceutical company BMP Sunstone earlier this year.

In its vaccines business, Sanofi has made several key investments during the past several years: the construction of a research facility in Toronto, Canada; the creation of a new vaccines campus in Neuville, France; the construction of bulk and filling facilities in Val de Reuil, France, and the establishment of a bacteriological bulk facility in Marcy l'étoile, France; the creation of two new influenza vaccine facilities in Shenzhen, China, and Ocoyoacac, Mexico; and the completion of bulk and filling facilities, mainly dedicated to influenza and meningitis vaccines, in Swiftwater, Pennsylvania.

In April 2011, Sanofi completed its $20.1-billion acquisition of the biopharmaceutical company Genzyme and gained several manufacturing facilities. In its 2010 SEC annual filing, Genzyme reported on the construction of a new manufacturing facility in Framingham, Massachusetts, which is to include four bioreactors for producing Cerezyme (miglucerase) and Fabrazyme (agalsidase beta), which had been manufactured at the company's facility in Allston Landing, Massachusetts. According to Genzyme's annual filing, it expects to receive US approval for the Framingham facility in the second half of 2011. Genyzme had transferred production of certain products following manufacturing problems at the Allston facility and a subsequent FDA consent decree.

In 2010, Genzyme transferred its fill–finish operations for Fabrazyme and Myozyme (alglucosidase alfa), 160-L, sold in the US from the Allston facility to a contract manufacturer and to Genzyme's Waterford, Ireland, facility. Genzyme is expanding its fill-finish capacity by 400% at the Waterford facility, where Cerezyme, Lumizyme (alglucosidase alfa), and Myozyme (alglucosidase alfa) are filled–finished. It expects to receive product-specific approval for this additional capacity beginning in late 2011.

The company manufactures Lumizyme and Myozyme at the 4000-L bioreactor scale at a facility in Geel, Belgium. In its annual filing, Genzyme reported that it is adding a third 4000-L liter bioreactor at the facility and expects to receive approval of the additional capacity by the end of 2011. In addition, Genzyme began construction of an additional manufacturing facility in Geel, which will include two 4000-L bioreactors for Lumizyme and Myozyme production and expects to receive approval for this new facility in late 2014.

GlaxoSmithKline. GlaxoSmithKline (GSK) is moving ahead with a global restructuring program that is on track to deliver a target of £2.2 billion ($3.6 billion) of annual savings by 2012. These savings have been extracted from GSK's developed-country sales and marketing structure, support functions, R&D, and manufacturing infrastructure. Along with these changes are increased investment in emerging markets, according to the company's 2010 annual filing.

In emerging markets, in June 2011, GSK agreed to acquire Shenzhen Neptunus Interlong Bio-Technique's stake in the companies' previously formed joint venture, Shenzhen GSK–Neptunus Biologicals, for $39 million. The joint venture develops and manufactures seasonal and pandemic influenza vaccines in China, Hong Kong, and Macau. In December 2010, GSK agreed to acquire the Chinese pharmaceutical company, Nanjing MeiRui Pharma, including a manufacturing facility in Nanjing City, Jiangsu Province, China. In Russia, GSK formed an alliance with JSC Binnopharm for the local secondary manufacture of several GSK vaccines. Under this alliance, which was announced in November 2010, GSK will supply bulk vaccine and provide technology and expertise to enable Binnopharm to undertake the secondary manufacture, including filling and packaging of GSK vaccines. Binnopharm will be responsible for gaining approval of their facilities to allow supply of GSK cervical cancer, rotavirus, and pneumococcal vaccines under Binnopharm's trademark for the Russian public market.

In biologics, in September 2010, GSK and the Swiss custom manufacturing organization Lonza formed an agreement under which Lonza will supply manufacturing capacity for five GSK early-stage monoclonal antibodies. Lonza will initially manufacture clinical-trial batches of five compounds currently in Phase I and II development and provide flexible capacity for late-stage development and commercial launch. As part of the agreement, GSK will work with Lonza to assess options for the design, specification, location, and construction of a biopharmaceutical manufacturing facility within the United Kingdom.

Also, in 2010, GSK sold its Cidra, Puerto Rico, facility after the plant's closure in 2009, which followed manufacturing problems and a subsequent FDA consent decree for the facility in the early 2000s.

Novartis. In November 2010, Novartis defined the company's strategic focus to include pharmaceuticals, eye care, Sandoz (the company's generic-drug business), consumer healthcare, vaccines, and diagnostics. In addition, Novartis plans to strengthen its commercial position in emerging markets in China, Russia, Brazil, and India.

As part of its emerging-market strategy, in June 2011, Novartis broke ground for a new, $140-million pharmaceutical manufacturing plant in St. Petersburg, Russia. Once completed and approved for commercial production, which is expected in 2014, the facility will produce approximately 1.5 billion oral solid dosage units per year. The facility is part of a $500-million, five-year investment into Russian healthcare infrastructure announced by Novartis in December 2010, which addresses three core areas: local manufacturing, R&D collaborations, and public-health development.

In late 2009, Novartis announced a $1-billion, five-year investment to expand the China Novartis Institute for Biomedical Research. In March 2011, Novartis completed the $125-million acquisition of an 85% stake in the Chinese vaccines company Zhejiang Tianyuan Bio-Pharmaceutical. Novartis also is constructing a new, $300-million vaccine-manufacturing facility in Goiana, Brazil. The technical startup of the facility is planned for the end of 2014.

In Western Europe and the US, Novartis is proceeding with a long-term redevelopment of its headquarters site in Basel, Switzerland. First begun in 2001, the goal of the project, called "Campus," is to invest in R&D, corporate, and administrative activities at the site and to transfer production facilities from the site to other sites in the Basel region. Through Dec. 31, 2010, the total amount spent on the project was $1.9 billion, and the company expects to spend a total of $2.6 billion through 2015. In October 2010, Novartis announced that it would invest $600 million during the next five years to build new laboratory and office space in Cambridge, Massachusetts.

In vaccines, Novartis is investing in a new $240-million rabies and tick-borne encephalitis vaccine-manufacturing facility in Marburg, Germany. The facility is expected to open in 2012. In late 2009, Novartis opened a large-scale influenza cell-culture vaccine and adjuvant manufacturing facility in Holly Springs, North Carolina, in partnership with the US Department of Health and Human Services, Biomedical Research and Development Authority. The total investment in the new facility is expected to be at least $900 million, partly supported by grants from the US government and previous investments in influenza cell-culture technologies at the Novartis vaccines site in Marburg.

As part of an effort to optimize its manufacturing footprint, Novartis divested a Sandoz site in Jena, Germany, and announced its exit from a Ciba Vision production site in Cidra, Puerto Rico. In April 2011, Novartis finalized its acquisition of the eye-care company Alcon.

Merck. Following its $49.6-billion acquisition of Schering-Plough in late 2009, Merck & Co. began a global restructuring program in February 2010, in which Merck announced plans to reduce its total workforce, measured at the time of the merger, by approximately 17% as well as to eliminate vacant positions at the time of the merger. The reduction comes from eliminating duplicative positions in sales, administrative, and headquarter organizations as well as from the sale or closure of certain manufacturing and R&D sites.

As part of that restructuring, Merck announced plans to phase out operations at certain research and manufacturing sites as well as to continue to consolidate office facilities worldwide, as outlined in the company's 2010 SEC annual filing. The eight research sites affected include those in: Montreal; Boxmeer (Nobilon facility only), Oss, and Schaijk, Netherlands; Odense, Denmark; Waltrop, Germany; Newhouse, United Kingdom; and Cambridge (Kendall Square), Massachusetts.

In the second half of 2010, Merck began phasing out operations at eight manufacturing facilities, and these sites will exit the global network as activities are transferred to other locations. Merck reported plans to cease manufacturing activities at its facilities in Comazzo, Italy; Cacem, Portugal; Azcapotzalco, and Coyoacan, Mexico; and Santo Amaro, Brazil, and the company intends to sell the Mirador, Argentina and Miami Lakes, Florida, facilities. In Singapore, chemical manufacturing will be phased out at the legacy Merck site, but it will continue at the legacy Schering-Plough site. The company's pharmaceutical manufacturing operations will continue at both Singapore facilities. In addition, manufacturing operations at the Kenilworth, New Jersey, site will be discontinued, and these activities will be consolidated with existing operations at other Merck facilities. Also, earlier this year, Merck sold its contract biologics manufacturing activities to Fujifilm, including its equity interests in two Merck subsidiaries, Diosynth RTP and MSD Biologics UK. These entities had facilities in Research Triangle Park, North Carolina, and Billingham, United Kingdom.

In emerging markets, in July 2011, Merck signed a framework agreement with China's Simcere Pharmaceutical Group to form a joint venture in China with the goal of building a strategic partnership in development, registration, manufacturing, and sales. The initial focus of the partnership will be branded pharmaceutical products for cardiovascular and metabolic diseases. Simcere has seven GMP-approved manufacturing facilities in the Chinese provinces of Jiangsu, Hainan, Shandong, Jilin, and Anhui, according to company information. In April 2011, Merck formed a joint venture with India's Sun Pharmaceutical to develop, manufacture, and commercialize new combinations and formulations of branded generic drugs in emerging markets. Sun has 20 plants (for producing drug substances and finished products) in India, Israel, the US, Canada, Hungary, Brazil, Mexico, and Bangladesh.

Roche. In November 2010, Roche announced a companywide restructuring plan that is designed to result in annual cost savings of CHF 2.4 billion ($3.0 billion). Implementation, which is scheduled for 2011 and 2012, includes plans for reducing its workforce by 4800 positions worldwide. Most of the planned job reductions will occur in Roche's pharmaceuticals division, particularly in global sales and marketing organization and in manufacturing.

To further improve capacity utilization within its global manufacturing network, some technical operations activities will be reorganized in California, the US, Mannheim, Germany, and various other sites. In addition, Roche intends to seek buyers for its sites in Florence, South Carolina, and Boulder, Colorado. In its diagnostics group, Roche plans to close its manufacturing site in Graz, Austria, and transfer development and manufacturing activities relating to blood gas diagnostics to Rotkreuz, Switzerland, where the division's professional diagnostics unit has its global headquarters. Diagnostics chemical manufacturing and analytical services are expected to be discontinued in Mannheim, Germany, and transferred to Penzberg, Germany.

Roche will discontinue certain activities in research and early development. These include RNA interference research in Kulmbach, Germany, Nutley, New Jersey, and Madison, Wisconsin. In addition, plans also include reorganizing certain internal functions to free up resources for upcoming Phase II studies of new molecular entities.

Bristol-Myers Squibb. Bristol-Myers Squibb has substantially completed its new, $750-million multiproduct bulk biologics manufacturing facility in Devens, Massachusetts. The company plans to submit the site for regulatory approval in late 2011 or 2012, according to the company's 2010 SEC annual filling. The investment in the new biologics facility represents the largest capital project in the company's history. BMS also reported on meeting its goal of realizing its $2.5-billion productivity transformation initiative, first announced in December 2007, which included reductions to its manufacturing operations.

Other companies. Among other changes in Big Pharma manufacturing networks includes AstraZeneca's construction of a new $150-million manufacturing facility in the Kaluga region in Russia. In June 2011, the company also announced plans to establish a Predictive Science Center in St. Petersburg. In addition, AstraZeneca has established several partnerships with Russian development institutes, including the Skolkovo Innovation Centre and Russia Venture Company. In China, Eli Lilly is building a second manufacturing plant and dedicated diabetes research center. Earlier this year, Boehringer Ingelheim acquired the rights and substantially all the assets at Amgen's Fremont, California, development and manufacturing facility. The Fremont site includes a 100,000-ft2 manufacturing facility with a pilot plant and process-development laboratories. Boehringer Ingelheim will use the facility to enhance its contract-manufacturing activities. The company has been a contract manufacturer for Amgen.