Biopharmaceutical Manufacturing Leads Major Capital Investment

06 December 2004 00:01  [Source: ICB Americas]

Big pharma invests in biopharmaceutical manufacturing and drug discovery. Patricia Van Arnum reports.

Biopharmaceutical manufacturing and drug research have been key areas for capital investment by the major drug companies in 2004, with several companies making major investments. The major drug companies also continue to restructure their manufacturing operations, with some announcing plant closures in an effort to streamline operations and bring costs under control.

A key area of investment is biopharmaceutical manufacturing. “Experience in biotech manufacturing will be a competitive advantage in the pharmaceuticals market of the future,” said Jan van Koeveringe, head of pharma global technical operations, for Hoffmann-La Roche, who outlined details of the company’s biopharmaceutical manufacturing activities late last month. Hoffmann-La Roche is expanding its manufacturing capacity for biotechnology products by constructing a new biotech center at its Basel, Switzerland, campus and by adding an additional facility at its site in Penzberg, Germany. The projects, representing capital expenditures of about SFr 400 million ($349 million) each, will take three years to complete. The new facilities will initially be used to manufacture the active ingredients of two monoclonal antibodies used to treat cancer: Avastin (bevacizumab) and Herceptin (trastuzumab). Construction of the Basel site is expected to start in the first quarter 2005, with the facility qualification and approval process due to start in 2007. The Basel site will consist of a multi-purpose plant with fermentation capacity of 6 x 12.5 cubic meters and two downstream lines. The first market supply is planned for 2009, and the site will be used to make Avastin and other biotech development products.

The Penzberg project consists of a new building housing a multipurpose plant with fermentation capacity of 6 x 12.5 cubic meters and two downstream lines. The groundbreaking is currently underway, and the facility qualification and approval process is expected to start in 2007, with the first market supply planned for 2009. The facility will be used to manufacture Herceptin. Apart from Basel and Penzberg, Roche has biopharmaceutical production facilities in Nutley (USA); at the Genentech sites in Vacaville (USA), Porriño (Spain) and South San Francisco (USA); and at the Chugai sites in Utsunomiya and Ukima (both in Japan).

Genentech Inc., which markets Herceptin in the US, is teaming with Wyeth in a manufacturing alliance. In September, Genentech and Wyeth Pharmaceuticals, a division of Wyeth formed a manufacturing agreement for Herceptin (trastuzumab) under which Wyeth Pharmaceuticals will manufacture Herceptin’s bulk drug substance for Genentech at Wyeth’s production facility in Andover, Mass. Production is expected to start in 2006. Genentech received FDA approval in August 2004 to manufacture Avastin at its Vacaville, Calif., facility, which will supplement additional capacity at its South San Francisco site. Genentech is expanding its Vacaville facility, which is expected to come on stream in 2009, at a cost of $600 million.

Biogen Idec, which officially opened its new international headquarters in Zug, Switzerland, this year, is another major player moving forward with a large biopharmaceutical manufacturing investment plan. The company is proceeding with plans to construct a large-scale biologic manufacturing facility in Hillerød, Denmark. The 90,000-liter facility will be used to manufacture products in the pipeline and will bring Biogen Idec’s global large-scale manufacturing capacity to 270,000 liters. Biogen Idec expects to invest $340 million to build the facility, which is expected to be available for commercial production in 2008.

Meanwhile, Boehringer Ingelheim’s (BI) new €250 million biopharmaceutical active ingredients production plant in Biberach, Germany, which doubled the company’s production capacity there, received approval by the Food and Drug Administration earlier this year for the production of Enbrel (etanercept). BI is a contract provider of biopharmaceutical manufacturing.

In February, Sandoz, the generics arm of Novartis AG, inaugurated a new €50 million manufacturing plant at its Schaftenau site (near Kufstein) in Tyrol, Austria. The new facility consists of a 100-liter line for producing initial batches for clinical trials, and two production-scale fermenters with capacities of 3,000 and 13,000 liters. The new plant follows the opening of a 3,000-liter fermentation plant for biopharmaceutical production using microbial technology at Sandoz’s neighboring Kundl site in 2003.

Sandoz’s Slovenian affiliate Lek also opened a new €18 million biopharmaceutical production facility in Mengeš (near Ljubljana), the first of its kind in Eastern and Central Europe in February. The new biopharmaceutical manufacturing plant has two 200 liter perfusion fermenters.

Other In-House Manufacturing Investment

While biopharmaceutical manufacturing is garnering much of the larger investments in pharmaceutical manufacturing, the major drug companies are also making targeted investments for select products and continue to invest in offshore markets. In Europe, AstraZeneca is investing $114 million in new production facilities in Dunkerque, France, for Symbicort, the company’s key respiratory product for the treatment of asthma and chronic obstructive pulmonary disease. Symbicort is a combination of the inhaled corticosteroid budesonide and the bronchodilator formoterol. The new facilities at Dunkerque will include the expansion of additional pressurized metered dose inhaler (pMDI) filling and packing capacity as well as projects to upgrade and expand existing infrastructure.

Also, this year, Novartis completed a SFr 60 million ($52.4 million) expansion of its manufacturing facility in Schweizerhalle, Switzerland, to increase production capacity for its anti-hypertensive Diovan (valsartan).

In offshore markets, Roche is building a second manufacturing facility in Shanghai to produce the anti-cancer drug Xeloda (capecitabine) and the transplantation medicine CellCept (mycophenolate mofetil) for the Chinese market as of 2006. Earlier this year, Hoffmann-La Roche opened a new R&D center at Zhangjiang Hi-Tech Park in Shanghai, which will focus on medicinal chemistry research for lead generation and optimization. The new R&D center is part of Roche’s global pharmaceutical R&D network, which currently includes more than 5,000 scientists at four research centers dedicated to providing clinically differentiated drugs. In China, Roche is collaborating with the Chinese National Genome Centers in Shanghai and Beijing on genetic epidemiology studies into genetic predispositions to conditions such as diabetes and Alzheimer’s disease.

Meanwhile, Novartis, through its generics arm Sandoz, is investing in central and eastern Europe and India. Sandoz invested $80 million to open three new plants in Poland, India and Romania this year, a move that boosts its production capacity by 3 billion tablets and capsules. The new production and logistics facility ( a 25,000-square-meter complex) in Strykow, Poland, was built by Lek, the Slovenian Sandoz subsidiary and is focused on the production of oral solids. Initially focused on the production of oral solid formulations of generic medicines, including Ketonal, Amlopin, Lovastatinum and Altacet, the plant is expected to reach a production capacity of 1.5 billion tablets and capsules in the first year. Export production is estimated at 10 percent in the first year of operation, rising to as much as 20 percent.

The new Sandoz production plant in Kalwe, a suburb of Mumbai, India, will produce oral solids to supply global markets. The Targu Mures production site in Romania, which was built by Lek, the Slovenian Sandoz subsidiary, is focusing on all production and support activities supplying antibiotics for the European and East European market.

Restructuring Also Underway

However, as companies make investments, they are also restructuring some of their operations. In the wake of the acquisition of Aventis by Sanofi-Synthelabo, GlaxoSmithKline PLC (GSK) acquired for €453 million ($600 million) the injectable anti-thrombotic agents Fraxiparine (nadroparine), Fraxodi and Arixtra (onda-parinux) and related assets, includinga manufacturing facility located in Notre-Dame de Bondeville, France, from Sanofi-Aventis. Sales of Fraxiparine were €319 million in 2003. Worldwide sales of Arixtra were €24 million in 2003. The manufacturing facility located in Notre-Dame de Bondeville, is engaged mainly in the manufacture of Fraxiparine and Arixtra injectable products. As part of this transaction, GSK assumed responsibility for ongoing Arixtra clinical trials.

For its part, Novartis sold its pharmaceutical production site in Hettlingen, Switzerland, to Bernard Fraisse Group effective October 1, 2004. Novartis will contract with Bernard Fraisse Group to manufacture products at the Hettlingen site for at least two years after the transfer of ownership. Products manufactured at this site include gels, ointments and drops such as Voltaren, Dispatim, Viscotears, Genteal and Ultracortenol. Bernard Fraisse Group acquired a Novartis production site in Annonay, France, in 2002.

Earlier this year, Pfizer Inc. agreed to sell its pharmaceutical plant in Fajardo, Puerto Rico, to Galen Holdings PLC through its wholly-owned subsidiary, Warner Chilcott Company Inc., which last year purchased the women’s health products produced at the facility. Galen will continue to manufacture Pfizer medications until they can be transferred to other Pfizer facilities. Galen also plans to produce a number of its own products, which currently are handled by contract manufacturers, as well as new products now under development.

Pfizer maintains a manufacturingpresence in Puerto Rico, with five plants—employing more than 5,500 people—that produce some of the company’s top-selling medications, including Celebrex, Lipitor, Neurontin, Norvasc, Zoloft, and Zithromax.

Another player restructuring operations is Wyeth Pharmaceuticals, whichis ending all operations at its West Chester, Pa., facility , effective December 2004. The West Chester facility ceased manufacturing Wyeth non-penicillin products in 2000 and has been operating as a third-party manufacturer for other pharmaceutical companies. 

Eli Lilly and Company is closing its RTP Laboratory site in Research Triangle Park, N.C., The site has historically been the company’s center of excellence for high-throughput screening and combinatorial chemistry, but the company says much of that technology has evolved such that these operations can be more efficiently performed in existing facilities in Indianapolis, Ind.

On the manufacturing side, Lilly’s Clinton, Ind., manufacturing site will be narrowed to make products solely for the Elanco Animal Health business, ceasing operations for the portion of that site that currently produces human pharmaceutical products. Lilly is also discontinuing its plans to produce the bulk active ingredient for Xigris (drotrecogin alfa activated) at its Indianapolis operations, citing the news its manufacturing partner, Lonza Biologics has enough capacity to supply anticipated Xigris demand for the foreseeable future.

Meanwhile, Schering-Plough Corp. is in the process of developing its 88-acre site in Summit, N.J. for office space and research-and-development use in conjunction with consolidating several of its other New Jersey facilities. Schering-Plough purchased the Summit site from Novartis Pharmaceuticals Corp. in November 2000, with Novartis vacating the site as of April 2003. The research-and-development, laboratory and office complex totals roughly 1.7 million square feet in some 13 buildings. The site has been occupied for R&D, laboratory, administrative offices and pharmaceutical manufacturing. Schering-Plough has no plans for any manufacturing at the site. Since purchasing the site, Schering-Plough has constructed a new 145,000- square-foot drug safety evaluation facility on the site. The company plans to invest roughly $20 million in the next two years to prepare other buildings for occupancy. Summit is planned to become a major R&D site for Schering-Plough, though initial occupancy is expected to be by business and administrative functions.

R&D Garners Investment Dollars

As some companies seek to streamline manufacturing operations, others are investing in research and development facilities. The most recent move comes from Pfizer, which last month purchased the company’s La Jolla, Calif., pharmaceutical discovery and development campus for $372 million. The campus consists of roughly 1 million square feet of laboratory and office space on a 33-acre site. Over the past three years, Pfizer had invested more than $150 million in improvements to the La Jolla campus, including new laboratories and offices.

Pfizer La Jolla employs more than 1,500 scientists and support staff and is part of a global network of research and development sites that includes Ann Arbor and Kalamazoo, Mich.; Groton and New London, Conn.; St. Louis, Mo.; Cambridge, Mass.; Sandwich, UK; and Nagoya, Japan.

For its part, AstraZeneca PLC is moving forward with two major investments in the UK with the opening of new facilities in Alderley Park, Macclesfield, Cheshire, and additional investment to support the development of its research site in Charnwood, Loughborough, Leicestershire. These latest developments mean that AstraZeneca’s investment in the UK (from 1999 and planned until 2006), will approach £1 billion ($1.89 billion). It includes a £58 million investment at Alderley Park for a new Center for Advanced Lead Discovery and an £16 million investment at its Charnwood site for enhancing early discovery and safety assessment work in a range of different disease areas. Work on the new facilities began in July, with completion scheduled for early 2006. The company has committed over £350 million in capital expenditure investments for the North West and East Midlands (Alderley Park, Macclesfield, Charnwood and Avlon, near Bristol) over the past five years. In addition, the company has spent over £310 million in smaller projects to upgrade, improve and refresh its existing facilities and infrastructure in the UK. A further £325 million expenditure on capital and modernization projects is planned over the next three years.

In one of the largest university-commercial pacts, GlaxoSmithKline (GSK) and Imperial College London formed a new research collaboration in medical imaging under which GSK will contribute funding of £28m for the construction of a new Clinical Imaging Center, next to Hammersmith Hospital in West London, UK. Research will focus on cancer, stroke, neurological diseases such as Parkinson’s and multiple sclerosis and psychiatric diseases. GSK will invest a further £16 million in the latest PET (positron emission tomography) and MRI (magnetic resonance imaging) equipment. The Imaging Centre will be part of a new £60m research development by Imperial College to be completed by 2006.

In October, Merck & Co., Inc. opened a new research facility in Boston, and in July, Novartis opened the Novartis Institute for Tropical Diseases (NITD) in Singapore’s new Biopolis research facility. The Institute is focused on advanced biomedical research for neglected diseases, initially dengue fever and drug-resistant tuberculosis (TB). The NITD is a public-private partnership between Novartis and the Singapore Economic Development Board (EDB). The Institute’s goals are to have at least two compounds in clinical trials by 2008 and two novel and attractive compounds available to patients by 2013.

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