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Contract manufacturers and pharmaceutical ingredient suppliers proceed with select investments in biologics manufacturing, small-molecule synthesis, and formulation as the industry prepares for CPhI Worldwide in Milan.
As contract manufacturing organizations (CMOs) and pharmaceutical ingredient suppliers gather for CPhI Worldwide in Milan Oct. 2–4, the outlook for outsourcing is mixed. Companies are proceeding with select investments in small-molecule manufacturing, cautioned by increased competition from Asian suppliers and consolidation pressures. Asian suppliers continue to make inroads into the global outsourcing market as certain companies add small-molecule and formulation capacity. And for those CMOs also positioned in contract biologics manufacturing, the outlook is strong.
Lonza targets biologics
A positive sign for the contract primary manufacturing market is the recent performance of one industry leader: Lonza (Basel, Switzerland). Led by growth in its biopharmaceuticals sector, Lonza reported a 45.2% increase in its first half 2007 sales to CHF 642 million ($532 million) in its biopharmaceutical and exclusive synthesis business. Biopharmaceutical sales almost doubled to CHF 400 million ($332 million). Capacity utilization in its biopharmaceutical business was above 90%, according to the company's first half results.
Microbial production. Reflecting strong growth in its biopharmaceutical business, Lonza is investing in microbial and mammalian cell-culture production. Following its $460-million acquisition of Cambrex 's (East Rutherford, NJ) bioproducts and biopharmaceutical business in February, Lonza named Hopkinton, Massachusetts, as the global US headquarters for its microbial biopharmaceutical business and announced plans to invest more than $30 million in its Hopkinton site to support growth plans for microbial process development and manufacturing. The Cambrex acquisition netted Lonza additional biopharmaceutical services capabilities and small-and mid-scale microbial manufacturing capacity to complement existing microbial capacity in Visp, Switzerland. Lonza started producing current good manufacturing practices (CGMP) batches at a new 15,000-L microbial biopharmaceutical line in Visp, and a second line is mechanically complete.
Mammalian cell-culture production. In March 2007, Lonza began construction of its second large-scale mammalian facility in Singapore. The final build-out of the facility is expected to be completed and operational in 2011. The $350-million facility will have four mammalian bioreactor trains, each with a flexible capacity of 1000–20,000 L, inclusive of purification units.
In May 2007, Lonza broke ground for a new $300-million, 330,000-ft2-facility for biopharmaceutical manufacturing technologies, support systems, and warehouses in Portsmouth, New Hampshire, where the company has commissioned its largest-scale mammalian cell-culture plant to date. Lonza is adding a 5000-L bioreactor to the existing facility, which has 93,000 L of capacity. It also increased its capacity by acquiring Genentech 's (South San Francisco, CA) mid-scale mammalian biopharmaceutical production plant in Porriño, Spain, in late 2006.
Lonza further added to its biopharmaceutical toolbox in August with the acquisition of the "AggreSolve" technology and service business of Zyentia Ltd. (Cambridge, UK). AggreSolve is an in silico protein-analysis platform that can be applied to solving the problems posed by protein aggregation. Zyentia was founded in 2002 as a spinoff from the University of Oxford, based on technologies around protein folding and aggregation first developed in Oxford then in Cambridge by Professor Chris Dobson and coworkers.
Small-molecule synthesis. On the small molecule side, Lonza's exclusive synthesis business reported sales of CHF 242 million ($200 million) in the first half of 2007, down slightly from sales of CHF 257 million ($213 million) in the same period last year. The company attributed the decline to a transformation of its plant in Kourim, Czech Republic and deferred delivery schedules.
Niche technologies. Lonza is proceeding with select investments in its small-molecule business. It is building a new CHF 80 million ($66 million) large-scale plant for manufacturing highly potent active pharmaceutical ingredients (APIs) at its facilities in Visp. It already has small-scale facilities in Visp.
Lonza also is building a commercial-scale plant with supporting development and analytical laboratories in Visp for producing antibody drug conjugates. The plant will initially be capable of producing over 100 kg of antibody drug conjugates per year, and future expansion plans are built into the design. Stage I is expected to be on line in 2008. Lonza now operates laboratory-scale production and will bring small-scale pilot facilities on stream in 2007.
Investments in China. Like other CMOs, Lonza is building its position in Asia. The company completed a small-scale manufacturing plant for APIs in Nansha, China. The plant was scheduled to go on stream in August. In addition, the company is constructing a new large-scale API facility in China. Production is expected to begin in the second half of 2008.
Cambrex (East Rutherford, NJ) shifted its portfolio earlier this year, with the key move being the divestiture of its bioproducts and microbial biopharmaceutical business to Lonza for $460 million. It also sold its small-molecule API manufacturing facilities in Cork, Ireland, and Landen, Belgium, to International Chemical Investors S.A. With those moves, Cambrex now operates small-molecule research and manufacturing facilities in Charles City, Iowa; Karlskoga, Sweden; Milan, Italy, and North Brunswick, New Jersey.
In July, Cambrex began construction of a mid-sized CGMP manufacturing facility for small-molecule APIs and intermediates in Karlskoga. The plant is scheduled for completion by early 2009.
The company is also building new laboratory space to augment its existing high-potency development facilities at its site in Charles City, Iowa. The project includes the construction of an 11,500-ft2-facility with five new process development/kilo laboratory production suites for high-potency APIs and enhanced facilities for analytical development and quality control activities. The facility is scheduled to be completed by early 2008.
Saltigo expands in Germany
Saltigo GmbH (Langfeld, Germany) is investing EUR 30 million ($40.4 million) to modernize manufacturing facilities in Leverkusen and Dormagen, Germany. Saltigo also is investing EUR 10 million ($13.5 million) to convert an existing plant in Leverkusen into a multipurpose CGMP facility for manufacturing APIs and intermediates. The facility will include four modular units with total capacity of more than 200 metric tons.
Aptuit positions in India
As competition from Asian CMOs intensifies, Western-based CMOs are responding by enhancing their positions abroad.
A case in point is Aptuit Inc. (Greenwich, CT). In June, Aptuit and Laurus Labs Limited (Hyderabad, India) formed a new contract-drug development company, Aptuit Laurus (Hyderabad). Aptuit Laurus will consist of a 160,000-ft2 research and development facility in Hyderabad, a large-scale manufacturing plant that it is currently under construction in Pharma City, Vishakhapatnam, and Aptuit's existing informatics development and support group in Bangalore.
Aptuit has further committed to invest approximately $100 million during the next four years to build upon Aptuit Laurus's development, manufacturing, and informatics capabilities.
Aptuit has been actively building its contract drug-development portfolio. Recent acquisitions include SSCI, a solid-form research firm, and EaglePicher Pharmaceutical Services, which provides small-molecule synthesis capabilities, including high-potency actives.
SAFC makes bolt-on acquisitions
SAFC (St. Louis, MO) made several moves in 2007. It acquired Molecular Medicine BioServices Inc. (MMB, Carlsbad, CA), a biopharmaceutical contract manufacturing organization, to further enhance the biologics capabilities within its SAFC Pharma business segment. MMB's core expertise is in the development and clinical manufacturing of viral products.
SAFC also completed the construction of two new protein API facilities at its St. Louis manufacturing facility: a 25,000-ft2 CGMP purification and manufacturing suite for transgenic plant and other nonanimal derived protein APIs and a 6000-ft2 facility for purification of animal-derived protein APIs. The expanded capacity seeks to meet increased demand for large-scale supply and will meet late-stage clinical trial and commercial manufacturing needs for transgenic and naturally-sourced APIs.
SAFC completed the initial phase of a two-stage expansion at its SAFC Pharmorphix research facility in Cambridge, United Kingdom. SAFC Pharmorphix provides solid-form characterization and research. The company also expanded Pharmorphix's capabilities into the United States with a new laboratory at SAFC's high-potency API facility in Madison, Wisconsin.
Mid-size players invest
Mid-to small-sized CMOs are investing in production and service capabilities.
Albemarle. In 2006, Albemarle (Baton Rouge, LA) acquired the former DSM (Heerlen, The Netherlands) API and intermediates manufacturing facility in South Haven, Michigan. The acquisition provides kilo-, pilot-, and commercial-scale capacity and also provides Albemarle with certain projects for generic APIs.
Ricerca Biosciences. Ricerca Biosciences LLC (Concord, Ohio), a contract drug-development company, is embarking on a growth strategy in which it hopes to double its revenues by 2009. Earlier this year, it completed a financial restructuring that includes new equity and term facilities totaling nearly $50 million. That financing will help Ricerca to implement a multiyear business plan, which includes a $15-million investment to add chemistry and biological laboratories to its site in Concord, Ohio.
Almac Sciences. Earlier this year, Almac Sciences (Craigavon, UK) expanded its analytical services offerings in bioanalysis, characterization, stability testing, structure confirmation, and batch release. at its facility in Elvingston, Scotland.
The company also started a collaboration for fill-and-finish services with the Center for Pharmaceutical Science and Technology (CPST) at the University of Kentucky, which became a private laboratory, Coldstream Laboratories. Coldstream will provide IV formulation and sterile fill of cytotoxics and potents for clinical-trial applications. CPST opened a new $17-million sterile manufacturing facility in May 2006. By 2011, the Coldstream facility is projected to have annual revenues of $15 million and employ up to 50 science-based and other professional staff. The collaboration positions Almac Sciences in upstream offerings in cytotoxics; it also offers contract manufacturing of high-potency APIs at its facility in Craigavon, Northern Ireland.
Earlier this year, Almac Sciences also teamed with with BioCatalytics (Pasadena, CA) under which Almac Sciences will provide process development and manufacture for a select group of chiral intermediates and APIs based on enzymatic technology developed by BioCatalytics. BioCatalytics was subsequently acquired by Codexis (Redwood City, CA), which specializes in biocatalysis for small-molecule synthesis.
Last November, Almac Pharma Services completed a $10.5-million expansion of its formulation activities with the addition of extended formulation development services for solid-oral dosage forms from preclinical to pilot scale.
Cambridge Major Laboratories. Earlier this year, Cambridge Major Laboratories, Inc. (Germantown, WI), a pharmaceutical chemistry outsourcing company, partnered with Arlington Capital Partners with the aim of building a drug-development organization focused in three primary areas: APIs, formulation, and regulatory consulting services.
AMRI. In keeping pace with moves by CMOs to offshore locations, AMRI (Albany, NY) acquired the assets of Ariane Orgachem Pvt. Ltd. in Aurangabad and Ferico Laboratories Ltd. in Navi Mumbai, India, giving the company two API and intermediates facilities in India. AMRI also acquired additional land for expansion and plans to invest approximately $15 million to expand and upgrade manufacturing capabilities during the next three years.
Evotec. Evotec AG (Frankfurt, Germany) and Research Support International Limited (RSIL) formed a joint venture, Evotec-RSIL Ltd., in Thane, India, to design, synthesize, and manage compound libraries as a service. In addition, Evotec expanded its sterile-pharmaceutical manufacturing facility in Glasgow, UK. The company doubled its capacity for the aseptic GMP manufacture of clinical trial material.
Regis Technologies. Regis Technologies (Morton Grove, IL), which offers chromatography services and custom-synthesis , recently expanded its development area to include an additional 7000 ft2 of synthetic laboratories and offices.
Asian players raise global profile
Just as Western companies invest in India, Indian CMOs are raising their position in the global outsourcing market.
Jubilant Organosys. In April 2007, Jubilant Organosys Ltd. (Noida, Uttar Pradesh, India) acquired Hollister-Stier Laboratories (Spokane, WA), a contract manufacturer of sterile injectables. The move strengthens Jubilant's contract research and manufacturing services (CRAMS) business and provides the company with another US-based manufacturing facility. Jubilant also has a solid-dosage form manufacturing facility in Salisbury, Maryland.
Jubilant provides CRAMS for advanced intermediates, fine chemicals, APIs, and dosage-forms as well as drug-discovery and development services. In 2007, the company booked orders of $60 million for its CRAMS business, up from $40 million in 2006.
In June 2007, Jubilant commissioned a new dosage-form FDA-compliant manufacturing facility at Roorkee, Uttarakhand, India. The facility has annual manufacturing capacity of 1.6–1.8 billion tablets and 150 million capsules.
Jubilant Organosys has manufacturing facilities in seven locations: Gajraula (Uttar Pradesh) for advanced intermediates and fine chemicals; Nanjangud (Karnataka) for API manufacturing; Roorkee (Uttarakhand) for dosage forms; Salisbury, Maryland, for solid-dosage forms; Spokane, Washington, for sterile injectables; and Nira, Maharashtra, and Samlaya, Gujarat, India. The company also is a large producer of pyridine and pyridine derivatives and recently increased production capacity of pyridine and picolines to 42,000 tons per year.
NPIL Pharma. NPIL Pharma (Mumbai, India) is continuing a $100-million investment program in formulation development and manufacturing services. The company has invested roughly $50 million over the past three years as part of its early-phase (development) and late-phase (manufacturing) formulation services in the UK and India, and it plans a similar investment over 2007–2009. The investment includes a new sterile supplies pilot plant in Mumbai, India, which is scheduled to come on stream in the fourth quarter of 2007.
The company's focus on formulation services and final-dosage forms follows the addition of capabilities in this area from NPIL's 2006 acquisition of Pfizer, Inc. 's (New York) API and formulation manufacturing facility at Morpeth, UK. As result of the Morpeth acquisition, NPIL Pharma has annualized aggregate drug-formulation capacity of 3 billion tablets, 500 million low RH (<8%) tablets, 270 million hard-gelatin capsules, 180 million ophthalmic liquids, 48 million glass vials, and 30 million ampules.
In custom manufacturing, NPIL formed a new dedicated unit, NPIL Innovations or NPIL(i), to focus on developing and applying new technologies used in process development and production of APIs. The unit focuses on biocatalysis, chemocatalysis, and flow processing, including its catalyst-based racemization technology.
Dishman. In July, Dishman Pharmaceuticals and Chemicals (Ahmedabad, India) agreed to acquire Solvay Pharmaceuticals's (Brussels) fine-chemicals and vitamin businesses for an undisclosed sum. The deal includes Solvay's Veenendal, The Netherlands, facilities, as well as the intellectual property rights for fine chemicals, vitamin D, and vitamin D analogues.
The Solvay acquisition is the latest move by Dishman to acquire Western production assets. In 2006, it acquired the CMO Carbogen Amcis (Bubendorf, Switzerland), which included capabilities for high-potency APIs. In February 2006, it acquired I03S, Ltd. a company specializing in ozone chemistry, and in 2005 acquired the UK-based contract research company Synprotec, Ltd.
Wuxi PharmaTech. In China, the contract research and manufacturing firm Wuxi PharmaTech (Shanghai) is raising its position in the global market. The company is planning an US initial public offering (IPO) priced to raise roughly $120 million. Wuxi PharmaTech's operations are grouped into two segments: laboratory services (consisting of discovery chemistry, service biology, analytical, pharmaceutical development, and process development services) and manufacturing (manufacturing of advanced intermediates and APIs) to 70 pharmaceutical and biotechnology customers, including nine of the top 10 pharmaceutical companies, according to the company's prospectus.
Other companies move ahead
In another IPO, the drug-delivery and formulation company Eurand (Amsterdam) raised net proceeds of $100-million in the first half of 2007.