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The hot topic of discussion in the pharmaceutical industry these days is the biotech bubble, with the Nasdaq Biotech Index up 20 percent this year. Many mega-deals have been announced in the field of biologics. Capacity expansions, acquisitions, mergers and R&D plans have led to multi-million dollar investments into the ‘future of medicine’.
While the future of biologics is indeed promising, the mainstay of most pharmaceutical companies globally is the business of molecules produced by chemical synthesis. This week, we explore whether there is still a future for this business or not.
Traditionally, market research reports and forecasts are relied upon to assess the future of an industry. However, we looked at the future of chemical synthesis in a simpler fashion – by tracking companies that have ‘put their money where their mouth is’ by announcing capital investment plans in the recent past. Capital investments are usually done once significant due diligence has been completed. We share some emerging trends from recent news reports.
Investing millions in complicated chemistry
Novo Nordisk is betting big on a new daily oral version of its once-a-week injectable semaglutide for Type 2 diabetes. Currently in Phase III clinical trials, Novo will spend about US $ 1.2 billion on its first API plant in North Carolina (United States) which will manufacture the active ingredients for oral semaglutide along with current and future Novo insulin products. Another US $ 800 million will be invested in Denmark to add a plant which will tablet and package oral semaglutide as well as other future oral products.
Novo Nordisk’s subsidiary Xellia Pharmaceuticals, which focuses on providing anti-infective treatments, had acquired Fresenius Kabi’s dedicated lyophilized (freeze-dried) vial manufacturing facility in North Carolina last year for US $ 7.5 million. Just two months later, Xellia announced an investment plan of another US $ 100 million by expanding the freeze drying capacity and other injectable product technologies.
Few companies embark on a journey to develop synthetic peptide molecules as it is one of the most complicated areas of organic chemistry. While Novo Nordisk announced its blockbuster investment plans with semaglutide, other peptide specialists like US-based Ambiopharm have continued their expansion plans as well. Last year, the company expanded its facilities in the United States and China and more recently it announced that the expansion of its United States facilities will continue.
Expansions in the world of potent APIs
Expansion in the United States hasn’t only been limited to the manufacturing of peptides. In February this year, Cambrex announced its plans to expand its large-scale active pharmaceutical ingredients (API) capacity. In addition to providing a flexible, multi-purpose configuration, the facility will be capable of handling potent APIs.
Expansion for handling potent actives have also been embarked on at Regis Technologies in the United States, Johnson Matthey in Scotland and at Fareva’s newly acquired facility in Europe.
Capacity upgrades were not only limited to active ingredients since capsule maker and drug formulation specialist Capsugel said it will increase its liquid- and semi-solid-fill hard capsule manufacturing capacity at a plant in Scotland that it picked up in 2013.
Investments in inhalation products
Another area that has seen significant capacity upgrades is inhalation products. Sanofi recently announced significant investment into its UK facility which makes inhalation products. One of the drivers of Sanofi’s expansion is SkyePharma, which contracts out manufacturing to Sanofi for the drug delivery system of their newly-approved Flutiform asthma inhaler.
In the United States, Ritedose Corporation announced plans to invest up to US $ 110 million in its plant in Columbia, South Carolina, which specializes in inhalation products as well as eye and ear drops. The project intends to double the existing capacity to about 2 billion unit dose vials.
Across the South Carolina border, GlaxoSmithKline announced it would add another 130 jobs to its Zebulon facility where Advair, an asthma drug, drives much of the production,
Betting on emerging markets
Emerging markets continue to provide tremendous growth opportunities. Two weeks back, work started on GSK’s £100 million plant in India which plans to produce 8 billion tablets and 1 billion capsules annually. The facility will incorporate continuous processing that moves away from batch production, allowing for smaller facilities with lower operating expenses to produce gastroenterology drugs and anti-inflammatories for the Indian market.
Similarly, Astra Zeneca has partnered for a US $ 125 million investment into a plant in Algeria while Cyprus’ Medochemie will invest about US $ 16 million to build a facility in Vietnam.
Closer home, players in Bangladesh like Square Pharmaceuticals, India’s Indoco Remedies and Aurobindo Pharma and Indonesia’s PT Kimia Farma have plans to expand their manufacturing footprints.
There has also been a shift where international players are buying or building manufacturing capabilities in the United States. Indian generic major Lupin purchased its first US manufacturing facility through a US $ 880 million buyout of Gavis Pharmaceuticals. Competitor Cipla was not far behind – its US $ 550 million purchase of Invagen brought it access to US-based manufacturing activities.
Australian Mayne Pharma Group expanded its contract analytical and formulation development service business through a US $ 65 million expansion of its operations that will build oral-dose commercial manufacturing capabilities.
Our view
The information provided by PharmaCompass.com in this blog is limited to press-releases issued by some companies, and is definitely not comprehensive since the capital investments made would be substantially higher.
The world of small molecules still forms the bulk of global doctor prescriptions. And emerging markets, which form majority of the world’s population, continue to witness high growth. Moreover, reports suggest how Chinese companies are luring Indian scientists with higher pay to develop finished dosage form capabilities. Therefore, the industry will witness a lot more growth. Though it may not come from the same avenues as in the past.
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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”
