INTERVIEW: Biopharma to drive growth at Lonza

05 June 2007 11:11  [Source: ICIS news]

By Cheok Soh Hui

 

SINGAPORE (ICIS news)--Lonza will shift its focus for its biopharmaceutical business in the next two years from mergers and acquisitions (M&A) to consolidating its operations, said a senior official at one of the world’s largest life sciences companies on Monday.

 

“Lonza made several acquisitions last year, increasing the life sciences portfolio from 60% to nearly 90% of sales,” Lonza’s head of biopharmaceuticals Stephan Kutzer said in an interview.

 

The Switzerland-based chemical and biotech company’s focus in the next two years will be the integration of its newly acquired businesses such as Genetech’s Cambrex’s plants, including supplying the rapidly expanding Asian market.

 

With biopharmaceuticals earmarked as a key engine of growth, the firm plans to expand capacity at its plants in Singapore and Portsmouth in the US to meet rising global customer demand for drug ingredients.

 

The plants use mammalian cell culture systems to produce ingredients used in therapeutic treatments for diseases such as cancer and rheumatoid arthritis.

 

Lonza’s move underscores the bullish outlook for the biotech industry in Asia and elsewhere as pharmaceutical companies look to plug gaps in product lines with high-growth therapeutics.

 

Kutzer said he does not expect major M&A in the near future in the biopharmaceutical custom manufacturing industry, though the trend of large drug makers acquiring small biotech firms for quick market access and technology will likely continue.

 

Lonza plans to double sales for its pharmaceutical manufacturing business by 2010 from 2005, with its plants in Singapore expected to generate “a significant portion” of that, Kutzer said.

 

Lonza’s two mammalian plants in Singapore have up to four bioreactor trains combined, each with capacity of 1,000 to 20,000 litres. It is in Lonza’s interests to expand capacity at its plants to cut production costs.

 

The company is also eyeing a pipeline of new therapeutic medicines by its customers, which will in turn translate into higher demand for the drug ingredients that Lonza makes, analysts said.

 

While Lonza’s large-scale plants in Singapore and Portsmouth are key to the company’s mammalian production business, part of the company’s strategy includes complementing them with mid-scale capacity to meet customer needs for pre-clinical production.

 

“We will start next year the transformation of our Porrino plant in Spain to a multipurpose mammalian plant,” Kutzer said. “Our development and small-scale facility in Slough, UK, will support these projects with a robust product pipeline.      

 

“In addition, we will continue to expand our development and manufacturing capacities there as well,” he added.

 

In Asia, Lonza expects to face strong competition in the biopharmaceutical business while working at protecting its intellectual property (IP), an issue still prevalent in many Asian countries where regulations are lax, Kutzer said.

 

In China, Lonza is building a performance chemicals plant to make amine, used in antimicrobial applications and will begin operations in 2008.

 

Its strategy for the world’s fourth largest economy includes focusing on the manufacture of active pharmaceutical ingredients and vitamins and building up its research and development capability as costs are significantly lower than in developed countries.

 

However, India, with its ready expertise and low costs a hotbed for biopharmaceutical investors, “remains a white spot for Lonza, but we’re reviewing our strategy on how to increase our presence in this market”, Kutzer said.

 

The company has sales offices in the country, but has yet to acquire or establish plants there.

 

Regulatory hurdles surrounding the sourcing of biological materials, lax IP laws and an uneven infrastructure are some of the potential risks of foreign biopharmaceutical firms looking to do business in India, according to a 2006 Boston Consulting Group report.

 

This article will appear in the 11 June edition of ICIS Chemical Business.

 

By: Cheok Soh Hui
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