February 2007

REGULATIONS/DISTRIBUTION

US Court Delays FDA Drug-Pedigree Requirements

Rockville, MD (Dec. 18)—The US Food and Drug Administration (www.fda.gov) modified its requirements for drug pedigrees accompanying wholesale pharmaceutical transactions, following a US District Court preliminary injunction barring the agency from enforcing certain provisions of the rule that was to have gone into effect on Dec. 1.

www.activis.com

The injunction, filed on Dec. 11 by Judge Joanna Seybert of the US District Court for the Eastern District of New York (Brooklyn, NY and Central Islip, NY, www.nyed.uscourts.gov), blocks the enforcement of a set of rules [21 CFR 203.50(a)(1-6)] that would have required secondary wholesalers (those who do not have formal authorized-distributor relationships with manufacturers) to supply pedigrees tracing the chain of custody all the way to the maker. The enjoined rules also would have required the pedigree to include data such as lot and control numbers, dosage, container size, and number of containers.

Other pedigree requirements remain in effect, FDA says, and wholesalers can comply by providing a pedigree that tracks the drug to initial sale by an authorized distributor. Though the injunction strictly applies only to the Eastern District of New York, to avoid the chaos that would follow a regional patchwork of requirements, FDA indicated that it will apply the Eastern District standard throughout its jurisdiction (1).

The lawsuit was filed Sept. 20 by online discount outlet RxUSA Wholesale, Inc. (Port Washington, NY, www.rxusa.com) and six other regional secondary wholesale operations. The suit claims that contradictions in the Prescription Drug Marketing Act (as modified by the Prescription Drug Amendments of 1992) made it effectively impossible for wholesalers to comply with the law or the regulations derived from it. Essentially, the law and the regulation required secondary wholesalers to obtain and pass on pedigrees stretching back to the original manufacturer, but did not require authorized distributors (from whom the secondary market buys its products) to provide pedigrees linking the lots back to the manufacturer.

In issuing the injunction, Judge Seybert confirmed a Magistrate Judge's "Recommendation and Report," which held that implementing the rules as they were due to go into effect Dec. 1 would have destroyed the plaintiffs' business. Thus, FDA is barred from enforcing the rules until the suit is tried and decided.

References

1. US Food and Drug Administration, Guidance for Industry: Prescription Drug Marketing Act (PDMA) Requirements, (FDA, Rockville, MD, 2006), http://www.fda.gov/CDER/regulatory/PDMA/PDMA_qa.pdf, accessed Jan. 17, 2007.

–Douglas McCormick

REORGANIZATION

Astellas Transfers Three European Plants to Temmler Group

Tokyo (Dec. 21)—Astellas Pharma Inc. (www.astellas.com) agreed to transfer three European plants to the Temmler Group (Marburg, Germany), a pharmaceutical company and contract manufacturer. The move is part of Astellas's plan to reduce the number of its production sites.

Astellas transferred to Temmler the bulk assets of its plants in Munich, Germany and Klinge, Ireland, and all stocks of Produzioni Farmaceutiche Carugate S.r.l. The products previously manufactured at the plants will be sourced from Temmler, and Astellas transferred roughly 400 employees to Temmler. The transfer of the facilities was completed Jan. 1, 2007.

Astellas previously announced (in its mid-term five-year management plan, ending in fiscal year 2010) a plan to reduce the number of its production sites from the current 18 (nine in Japan and nine outside of Japan) to around 10.

Astellas will receive a special charge of YEN 4.6 billion ($39 million) as a cost for streamlining the facilities in the fiscal year ending March 2007.

Astellas was formed in 2005 following the merger of Fujisawa Pharmaceutical Co., Ltd. and Yamanouchi Pharmaceutical Co., Ltd.

–Patricia Van Arnum

EXPANSION

Actavis Expands Manufacturing Operations in India

Hafnarfjordur, Iceland (Dec. 21)—The generic drug manufacturer Actavis Group (www.actavis.com) is expanding its manufacturing capabilities in India and plans to close a facility in Norway.

Actavis acquired a solid-dosage manufacturing plant from Grandix Pharmaceuticals, Ltd. (Chennai, India, www.grandixpharma.com), a pharmaceutical manufacturing and marketing company. Actavis says the facility gives it low-cost manufacturing capability in India, where it plans to develop and manufacture products for the US and European markets, including developing and relaunching older products that need a lower cost base to compete in international markets.

Homeland Security Secretary Michæl Chertoff

Actavis plans to increase the manufacturing capacity of the Indian facility to roughly 4 billion tablets over the next 18 months and strengthen the development and regulatory affairs units.

"The new facility will enable Actavis to further reduce its manufacturing costs and provide the support and expertise needed to extend our growth into key European markets and the US," said Actavis CEO and President Robert Wessman in a company release. "I believe this is an important step for Actavis that we now have a backward integration with a growing API development unit, in addition to one of the strongest CRO companies in India."

The acquisition of the facility from Grandix is Actavis's latest move in India. In 2005, it acquired Lotus Laboratories (Bangalore, India), a contract research organization specializing in clinical and bioavailability studies of pharmaceuticals. In 2006, Actavis also formed manufacturing agreements with the Indian pharmaceutical companies Emcure Pharmaceuticals Limited (Pune, India, www.emcure.co.in), Shasun (Chennai, India, www.shasun.com), and Orchid Chemicals and Pharmaceuticals, Ltd. (Chennai, India).

Actavis divests Norwegian manufacturing site

As it expands in India, Actavis is consolidating its European operations. It announced that it divested its manufacturing facility in Lier, Norway. The plant manufactures tablets, liquids, creams, and ointments, primarily for the Nordic, European, and Middle Eastern markets.

Actavis acquired the Lier facility as part of its 2005 acquisition of the human generics business of Alpharma, Inc. (Fort Lee. NJ, www.alpharma.com).

Actavis is selling the Lier plant to Storebrand (www.storebrand.com), a Norwegian life insurance and financial services company, which is leasing the facility to the contract manufacturer Inpac AB (Lund, Sweden). Actavis is receiving roughly €10 million ($13 million) for the plant, and Inpac subsequently signed a five-year supply agreement with Actavis.

Actavis's Norgesplaster production facility in Vennesia, Norway is not affected by the sale of the facility.

–Patricia Van Arnum

MANUFACTURING

Pfizer Proceeds with Biotech Manufacturing Expansion in Sweden

Stockholm, Sweden (Dec. 15)—As part of a plan to expand its biotechnology production capacity, Pfizer, Inc. (New York, NY, www.pfizer.com) commissioned the construction company Skanska AB (www.skanska.com) to build a plant in Strångnås, Sweden for manufacturing Pfizer's human growth hormone product "Genotropin" (somatropin [rDNA origin] for injection).

The plant is part of a SEK 1.5-billion ($219-million) investment by Pfizer in the Swedish facility. In addition to building the plant, Skanska also will be responsible for installing process equipment. Skanska's contracts amount to roughly SEK 600 million ($87 million).

The project consists of a 5000-m² building that will be adjoined to an existing plant. Construction is underway and is expected to proceed for 30 months.

–Patricia Van Arnum

REGULATIONS

DHS Proposes Regulations for Chemical Facilities

Washington, DC (Dec. 28)—The US Department of Homeland Security (DHS, www.dhs.gov) proposed regulations for improving security at high-risk chemical facilities, a category that may include some pharmaceutical production facilities.

"The consequences of an attack at a high-risk chemical facility could be severe for the health and safety of the citizens in the area and for the national economy," said Homeland Security Secretary Michael Chertoff in a prepared Dec. 22 statement. "Congress has provided the department with a critical new authority to set performance standards that are both sensible and disciplined, allowing owners and operators the flexibility to determine an appropriate mix of security measures at their facility under our supervision and subject to our approval. We're grateful for this new authority, and we intend to implement it quickly and apply it aggressively."

The proposed regulations require that chemical facilities fitting certain profiles (based largely on data from the US Department of Environmental Protection risk-management chemical safety program) to complete a secure on-line risk assessment to determine overall risk. High-risk facilities then will be required to conduct vulnerability assessments and submit site-security plans that meet the department's performance standards.

The Homeland Security Appropriations Act of 2007 requires that the proposed regulations be issued by April 4, 2007, and the department says that the rules will go into effect immediately for the highest-risk facilities, with other plants coming into compliance through 2007 and 2008. The proposed regulations provide chemical facilities with opportunities to challenge the disapproval of a site-security plan. Failure to comply with performance standards may result in civil penalties as great as $25,000 per day, and egregious instances of noncompliance could result in an order to cease operations.

The DHS proposal notes that most chemical facilities already have voluntary security programs.

The full proposed rule was published in the Dec. 28, 2006, Federal Register and is available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/06-9903.htm.

–Douglas McCormick

MANUFACTURING

Lonza Advances Manufacturing Strategy

Basel, Switzerland (Dec. 5)—Lonza Group Ltd. (www.lonza.com) and Singapore's Bio*One Capital (www.bio1capital.com) have formed a joint venture, Lonza Biologics Tuas, to build a large-scale mammalian cell-culture facility in Singapore for as much as $350 million. Bio*One Capital is the investment arm of the Singapore Economic Development Board (www.edb.gov.sg).

The new Lonza Biologics Tuas facility will have as many as four mammalian bioreactor trains, each with a flexible capacity of 1000–20,000 L and inclusive of purification units. The plant will be constructed in two phases. Construction of the shell will begin in February 2007. Final build-out of the facility is scheduled for completion and operation no later than 2011. Lonza Biologics Tuas expects to hire 350 people to staff the operation.

The facility will be Lonza's second large-scale mammalian manufacturing plant in Singapore and its third one overall. Lonza and Bio*One Capital entered into an initial joint venture, Lonza Biologics Singapore Pte Ltd, in February 2006 to build an 80,000-L large-scale mammalian biopharmaceutical production facility. Lonza took 100% ownership of this facility upon the signing of the Lonza Biologics Tuas joint venture. Genentech, Inc. (South San Francisco, CA, www.gene.com) has the exclusive option to acquire the Lonza-owned facility between 2007 and 2012.

Lonza announced in November its plan to give Genentech the option to purchase the Singapore facility. As part of the plan, Lonza also agreed to buy Genentech's mid-scale mammalian biopharmaceutical production plant in Porriño, Spain for $150 million. During the first week of December, Lonza and Genentech closed that deal. The new facility, which has 40,000 L of biologics manufacturing capacity, is named Lonza Biologics Porriño S.L. Lonza will retain the facility's 310 employees.

Lonza inks API pact with Solvay

In other news, Lonza formed a long-term strategic manufacturing alliance with Solvay Pharmaceuticals, Inc. (Marietta, GA, www.solvaypharmaceuticals-us.com) under which Lonza will produce a selection of Solvay's large-volume active pharmaceutical ingredients (APIs). The agreement builds on an existing API commercial partnership between the companies.

–Patricia Van Arnum

DIVESTMENT

Merck KGaA Launches Merck Serono SA and Plans to Divest Generics Business

Darmstadt, Germany (Jan. 8)—Merck KGaA (www.merck.de) closed on its roughly CHF 16.6-billion ($13.3-billion) deal to acquire a majority stake in the European biotechnology company Serono (Geneva, Switzerland, www.serono.com), officially launched Merck Serono S.A. as a new entity within Merck KGaA, outlined its integration strategy, and announced plans to divest its generics business.

The integration of Serono provides Merck KGaA with a biopharmaceutical products portfolio with 2005 pro forma sales of approximately EUR 3.6 billion ($4.7 billion) and approximately 14,500 employees worldwide.

Merck Serono S.A. will be combined with the current Merck Ethicals division and operate a division (headquartered in Geneva) of Merck KGaA's pharmaceuticals business. In the United States, the business will operate under the name EMD Serono.

"With the combined innovative power of two strong companies, we have the unique opportunity to create a superb union of pharmaceutical chemistry and biotechnology," said Elmar Schnee, new CEO of Merck Serono S.A., in a prepared statement. "We want to utilize the best of both companies. A total of 28 projects in clinical development, a combined R&D budget of approximately EUR 1 billion, and the two key growth drivers, 'Erbitux' for oncology and 'Rebif' for the treatment of multiple sclerosis, give us the best foundations for a successful future."

In addition to becoming CEO of Merck Serono S.A., Schnee also was appointed as member of the executive board of Merck KGaA. Olaf Klinger was appointed chief financial officer of Merck Serono S.A., and François Naef was named chief administrative officer.

Company outlines integration plan

Following a planning phase, 25 teams consisting of approximately 170 integration managers will implement the integration processes throughout the company. The project will be led by an Integration Steering Committee headed by Karl-Ludwig Kley, vice-chairman of the executive board of Merck KGaA.

The Executive Management Board of the Merck Serono division will consist of executives from both companies. It includes Schnee, Franck Latrille (deputy head, development, international), Roland Baumann (strategy, management process and compliance), Vincent Aurentz (business development, portfolio management), Bernhard Kirschbaum (research), Richard Douge (marketing), Wolfgang Wein (oncology), Roberto Gradnik (Europe), Fereydoun Firouz (United States), Hanns-Eberhard Erle (production), Naef (human resources), and Dorothea Wenzel (controlling).

In the first quarter of 2007, Merck plans to conduct a capital increase of €2–2.5 billion ($2.6–3.2 billion) to refinance the Serono takeover. In addition, a bond is planned to be issued in the second half of the year.

Globally, Merck Serono will operate under the new name and with a new logo, and pharmaceutical packaging also will be changed to the new design in the coming months and years.

Erbitux production to be consolidated in Corsier-sur-Vevey

For efficiency reasons, the planned production facility for "Erbitux" (cetuximab) will be consolidated in Corsier-sur-Vevey, Switzerland. Merck says it will continue to invest in its pharmaceuticals and chemicals business sectors at its headquarters in Darmstadt.

Merck KGaA explores divestiture of its generics business

Merck KGaA also announced that it is evaluating the divestiture of its generics division (Merck Generics). The company said in a prepared statement that it is not yet engaged in initial discussions with any potential buyers.

Merck says its generics business ranks third in the world. Merck Generics reported 2005 sales of €1.8 billion ($2.3 billion) and operating revenue of €238 million ($309 million). The division employs roughly 5000 people worldwide.

"Merck Generics has a strong business with excellent leadership and good growth prospects for the future. However, it will need continued investment to fully realize its potential and strengthen its market presence," said Michael Roemer, chairman of the executive board of Merck KGaA, in a company release. "In light of the far-reaching changes occurring in the market, we are considering as an option the divestiture of Merck Generics to a qualified buyer."

–Patricia Van Arnum