Biologics Leads Manufacturing Investments

REFLECTING STRONG GROWTH for biologic-based drugs (1), several major pharmaceutical companies recently completed or initiated manufacturing investment plans in biologics manufacturing. At the same time, the relatively flat growth prospects for small molecules result in a rationalization of manufacturing capacity among the pharmaceutical majors.

Biologics leads the way

A major biologics project announced in 2006 is Bristol-Myers Squibb's (New York, NY) investment of $660 million for a new, large-scale, multiproduct bulk-biologics facility in Devens, Massachusetts to support increased production of "Orencia" (abatacept) and other biologic compounds in development. The company also is investing $200 million to expand its finish and package biologics facility in Manati, Puerto Rico (2).

BMS's project comes on the heels of several other large projects. In 2005, Wyeth (Madison, NJ) opened a new, $2-billion biotech production facility in Grange Castle, Ireland. Centocor, a subsidiary of Johnson & Johnson (New Brunswick, NJ) is building a 28,000-m² biologics manufacturing facility in Ringaskiddy, Cork, Ireland, scheduled to come on-line by 2010 (2).

A ramp-up in vaccine production

Several expansions and greenfield projects for vaccine production are underway. Novartis (Basel, Switzerland) is investing roughly $600 million, which includes a $220-million award from the US Department of Health and Human Services, to build the first cell-culture-derived influenza vaccine manufacturing plant in the United States in Holly Springs, North Carolina. Construction is to begin in 2007.

Novartis is seeking to become the first to commercially produce and market flu cell-culture vaccines for European markets. US clinical studies are ongoing.

Once completed and approved for commercial production, the planned Holly Springs site is expected to produce 50 million doses of seasoned trivalent flu vaccines annually for use in the United States and 150 million monovalent doses annually within six months of a pandemic flu declaration.

GlaxoSmithKline (GSK, London, UK) is investing roughly £102 million ($191 million) over the next four years in a new vaccine-manufacturing plant in Singapore for the primary production of pediatric vaccines. In 2005, GSK boosted its global vaccine-production network in North America with three major acquisitions: Corixa Corporation; a vaccine-production site in Marietta, Pennsylvania, acquired from Wyeth; and ID Biomedical with flu vaccine manufacturing facilities in Canada. GSK is expanding and upgrading ID's manufacturing facilities to produce 75 million doses per year of ID's "Fluviral" egg-based influenza vaccine. GSK also is investing £64 million ($120 million) to expand vaccine production in Dresden, Germany. The project is scheduled for completion in 2008 (2).

Sanofi Pasteur, the vaccines business of Sanofi-Aventis (Paris, France), is investing $30 million in its Toronto, Canada component-pertussis and polio-vaccine facilities. In 2005, Sanofi began construction of a $150-million manufacturing facility in Swiftwater, Pennsylvania, which will replace its existing plant and double the site's capacity there for the 2008–2009 influenza season. Sanofi also is investing 160 million euros ($202 million) for a formulation-filling facility in Val de Reuil, France and will expand cell-culture-based virology production at its facility in Marcy l'Étoile, France (2).

Merck and Co., Inc. (Whitehouse Station, NJ) is building a new, $300-million vaccine-manufacturing facility in Durham, North Carolina. The facility will manufacture some of Merck's existing products such as measles, mumps, rubella, and chicken pox vaccines. In the long term, it will support the manufacturing of new vaccines (2).

Biotech majors proceed with biologics projects

While the major pharmaceutical companies invest in biologics capacity, so too are the major biotechnology companies. Amgen (Thousand Oaks, CA) is investing $1 billion over the next four years to expand its biologics manufacturing capacity in Puerto Rico. This includes expanding its bulk-production plant for "Neupogen" (filgrastim) and "Neulasta" (pegfilgrastim), expanding the built (but not yet licensed) bulk-protein plant for "Epogen" (epoetin alfa) and "Aranesp" (darbepoetin alfa), building a new fill–finish facility, and enhancing its existing fill–finish facility. It also is investing $1 billion in new process development, bulk-protein manufacturing, formulation, and fill–finish facilities in Cork, Ireland, scheduled to be operational in 2009.

These investments are in addition to Amgen's $2.2-billion acquisition of Abgenix, Inc. (Fremont, CA) in 2006. The deal included Abgenix's 100,000-ft² manufacturing plant in Fremont, California that will produce panitumumab. In 2005, Amgen also opened a new manufacturing facility in West Greenwich, Rhode Island to produce "Enbrel" (etanercept).

Genentech, Inc. (South San Francisco, CA) is adding 200,000 L of bioreactor capacity with a new manufacturing facility at its site in Vacaville, California, which is expected to be licensed in 2009. It also added 90,000 L of bioreactor capacity in 2005 through its $408-million purchase of Biogen Idec's Oceanside, California facility, which is planned to manufacture "Avastin" (bevacizumab). Genentech is also adding 20,000 L of bioreactor capacity in Porriño, Spain for Avastin production, with licensure expected in 2006.

Small-molecule rationalization

As the major pharmaceutical companies ramp up production capacity in biologics, they are rationalizing capacity in small molecules and at other facilities. Pfizer, Inc. (New York, NY), for example, hopes to achieve annual cost savings of $4 billion by 2008 through a restructuring program, part of which will come from optimizing its manufacturing network.

Through the first half of 2006, Pfizer identified 18 manufacturing sites for rationalization: Angers and Val de Reuil, France; Arecibo and Cruce Dávila, Puerto Rico; Augusta, Georgia; Bangkok, Thailand; Corby and Morpeth, United Kingdom; Groton, Connecticut; Holland, Michigan; Jakarta, Indonesia; Seoul, South Korea; Orangeville, Canada; Parsippany, New Jersey; Tlalpan, Mexico; Tsukuba, Japan; and Stockholm and Uppsala-Fyrislund, Sweden. Pfizer notes staff reductions in operations at: Sandwich, United Kingdom; Lincoln and Omaha, Nebraska; Puerto Rico; Lititz, Pennsylvania; and Brooklyn, New York.

Thus far in 2006, Pfizer has sold or agreed to sell its facilities in Cruce Dávila, Puerto Rico to Abraxis Biosciences, Inc. (Los Angeles, CA), its pharmaceutical manufacturing facilities in Augusta, Georgia to Xethanol Corporation (New York, NY), its active pharmaceutical ingredient (API) and finished-drug manufacturing plant at Uppsala, Sweden to Kemwell Pvt. Ltd. (Bangalore, India), and its facility in Morpeth, UK to NPIL Pharma (Mumbai, India).

As part of its new supply strategy, Merck plans to sell or close five of its 31 manufacturing sites and two preclinical sites by the end of 2008 and eliminate approximately 7000 positions companywide.

The moves are part of Merck's new supply strategy, as discussed by John Markels, Merck's vice-president of strategic initiatives, who spoke at a Drug, Chemical, and Associated Technologies Association (Robbinsville, NJ) meeting earlier this year. The new supply strategy focuses on how the supply chain may be leveraged as a competitive advantage and to use both internal and external manufacturing sources to optimize its manufacturing network. To this end, Markels emphasized five major themes: compliance as a competitive advantage, competitive value derived from optimizing manufacturing, commercialization excellence, a customer-focused supply chain, and a cultural and capabilities advantage (3).

In other restructuring, Schering-Plough Corporation (Kenilworth, NJ) plans to phase out manufacturing operations at its Manati, Puerto Rico site, expecting to discontinue operations there by the end of 2006. The company also will reduce its workforce at manufacturing facilities in Las Piedras, Puerto Rico and in Kenilworth and Union, New Jersey.

References

1. S.King, "The New Pharmaceutical Value Chain: Biologics Set to Surpass Growth in Small Molecules," Pharm. Technol. 30 "Technology Outlook: APIs, Intermediates, and Formulation" supplement, s6–s10 (2006).

2. E. Greb, D. McCormick, and P. Van Arnum, "Pharmaceutical Technology's Manufacturing Rankings," Pharm. Technol. 30 (7), 36–50 (2006).

3. P. Van Arnum, "Outsourcing Strategies: A New Paradigm," Pharm. Technol. Sourcing and Management 2 (4), e4–e24 (2006).