Fundamentals are strong for the US generic drug industry. Double-digit growth is projected, and growth for active pharmaceutical ingredients (APIs) for generic drugs outpaces growth for APIs for innovator drugs. Also, the industry is positioning for further growth with growing support for biosimilars.  

Drugs  with sales of $160 billion are expected to come off patent by 2015, according to 

 (London). 2008 and 2011 are projected as particularly strong years for growth in generic drugs. Over the next several years, an estimated $80 billion in 2005 product sales will be exposed to generic competition and a further $77  billion will be subject to generic incursion between 2011 and 2015, according to Datamonitor (1).  

Several top-selling drugs either lost US patent protection in 2006 or will in 2007. 

(Whitehouse Station, NJ) "Zocor" (simvastatin) lost US patent protection in 2006, and the patent for 

 Plavix"(clopidogel) was challenged. In 2007, 

( (New York, NY) "Norvasc"(amlodipine) and "Risperdal" (risperdal) by 

(J&J, New Brunswick, NJ) subsidiary Janssen LP will lose patent protection (1).  

In addition to Zocor in 2006 and Norvasc and Risperdal in 2007, other key drugs recently came off patent or are slated to come off patent. In, 2006, key  drugs that came off patent included Pfizer's "Zoloft" (sertraline), 

(New York, NY) "Pravachol" (pravastatin), 

 (GSK, London) "Zofran" (ondansetron) and "Flonase" (fluticasone), and 

 (Ingelheim, Germany) "Mobic" (meloxicam). In 2007, key drug coming off patent are Pfizer's "Zyrtec" (cetirizine), GSK's  "Coreg" (carvedilol), and Sanofi-Aventis's "Ambien" (zolpidem) (1). 

2005 was a watershed year for the US generics industry. In 2005, for the first time in US history, generic prescription volume was higher than branded volume. Generic prescription grew by 13% in 2005, compared with 7% growth for the overall market, according to data from 

(Plymouth Meeting, PA). In all, generic prescription volume reached 60%, an all-time high (2).  

The rising influence of the generic drug industry on the US pharmaceutical industry is evident by the positioning of generic drug manufacturers among the top 20 pharmaceutical companies, based on total US dispensed prescriptions in 2005. Three generic drug manufacturers, 

 (Corona, PA), respectively ranked third, fourth, and fifth among the top 20 pharmaceutical companies in 2005, according to IMS Health. Teva pulled in  prescriptions of 245.3 million, representing 15% growth and a 7% share of the US prescription market on a volume basis. Mylan pulled in 228.4 prescriptions, representing 7% growth and a 6.3% market share. Watson Pharmaceuticals pulled in 188.4 prescriptions, representing 8% growth and a 5.2 market share. Only two companies performed better in 2005–Pfizer, with 324.5 million prescriptions and Novartis (Basel, Switzerland) with 281.6 million prescriptions (2).  

Other generic drug companies making the top 20 companies in 2005 were Ivax Corporation (acquired by Teva Pharmaceuticals in 2006), which pulled in at number 8, with 109.6 million prescriptions, 

 (Woodcliff Lake, NJ) at number 13 with 83.1 million prescriptions, Qualitest Products at 74.7 million prescriptions (ranking number 16) ,and 

 (Woodcliff Lake, NJ) (ranking number 18) with 70.3 million prescriptions.  

The growth in generics drugs is reflected in the growth for active pharmaceutical ingredients (APIs) to the generic drug indusry. In 2005, generic APIs accounted for 43.5% (or $13.5 billion) of the total merchant API  market (including both APIs and advanced intermediates), according to the 

 Chemical Pharmaceutical Generic Association

 (CPA, Milan, Italy). Branded or innovative APIs accounted for 56.5% or $17.5 billion (1). 

Global demand for APIs as a whole (both branded or innovative and generic APIs) is expected to increase at an average annual rate of 8.2% over the next five years, according to CPA. The merchant market for APIs is expected to reach $46 billion by  2010, with demand for generic APIs growing faster than APIs for branded or innovative drugs. Demand for generic APIs is projected  to increase at an annual average rate of 10.9% over the next five years to reach $22.7 billion by 2010. In contrast, demand  for APIs for branded or innovative drugs is forecast to increase at an annual average rate of 5.9% to reach $23.3 billion  by 2010. This differential in growth rates will shift the balance of API power to near parity by 2010 with generic APIs at  49.4% and branded or innovative APIs at 50.6%, according to CPA (1). 

Biosimilars are an emerging opportunity for the US generics market as the industry awaits a regulatory pathway for biogeneric drugs. As biologics assume a larger share of Big Pharma's ethical drug sales, the impact of biogenerics (known as biosimilars in  Europe) will be key. Because of biogeneric erosion, the market for branded biologics in four key classes in the United States is expected to decline, according to 

 (Waltham, MA) (1). The US branded market for erythropoiesis-stimulating proteins (ESPs), granulocyte-colony stimulating factors (G-CSFs), insulins and insulin analogues, and human growth hormone (hGH) was $9.5 billion in 2006, and is expected to fall to $8 billion in 2012,  and to $3.8 billion by 2015, notes Decision Resources (1). 

(Thousand Oaks, CA) and J&J's "Procrit" and "Eprex" (epoetin alfa) are examples of two key biologic products in the ESPs class losing US patent protection in 2013. Amgen also faces US patent expiration in 2013 for the G-CSF  "Neupogen" (filgrastim),  according to Decision Resource (1). 

   (Bagsvaerd, Denmark) "Novolin" already have expired, and insulin analogues face near-term patent expiration in the United  States in 2013–2015. These analogues include Eli Lilly's "Humalog," Novo Nordisk's "NovoLog" and "Levemir," and Sanofi-Aventis's  "Lantus," says Decision Resources (1). 

				 hGH products that face near-term US patent expiration include Eli Lilly's "Humatrope" and Pfizer's "Genotropin" in 2008, 

 "Nutropin" in 2009, and Novo Nordisk's "Norditropin" in 2015, although patent protection does not necessarily ensure that competition will not reach the market (1). 			

Regulatory considerations for biogenerics

 (Holzkirchen, Germany) "Omnitrope" (somatropin recombinant) as a follow-on protein by the 

 (Rockville, MD)in 2006 fueled the ongoing debate in the United States regarding regulatory pathways for approving biogenerics. Omnitrope was one of the first drugs approved under the biosimilar pathway established by the European Commission. 

Sandoz received approval from FDA for "Omnitrope" (somatropin [rDNA origin]), as a follow-on version of a previously approved recombinant human growth hormone (rhGH) product. FDA's decision followed the approval of Omnitrope by European regulatory authorities in April 2006. Sandoz had filed a lawsuit against the FDA in September 2005 seeking a ruling on its new drug application, which it filed in July 2003. 

In approving Omnitrope, FDA emphasized that the drug is not a generic biologic because it is not rated as therapeutically equivalent to any of the other approved human growth hormone products. Instead, FDA characterized the drug as a "follow-on protein product" and stressed that its approval did not create a new pathway for follow-on versions of all protein products (3).  

 "The approval of Omnitrope in a 505 (b)(2) application does not establish a pathway for approval of follow-on products for biological products licensed under Section 351 of the Public Health Service Act, nor does it mean that more complex and/or less well understood proteins approved as drugs under the Food, Drug, and Cosmetic Act could be approved as follow-on products," said FDA in its ruling. "The majority of protein products are licensed as biological products under the Public Health Service Act, not approved as drugs under the Food, Drug, and Cosmetic Act. There is no abbreviated approval pathway analogous to 505 (b)(2) of 505 (j) of the Act for protein products licensed under Section 351 of the Public Health Service Act. Such a pathway for the approval or licensure of follow-on protein products under the Public Health Service Act would require new legislation (3).  

FDA also pointed out that its approval of Omnitrope does not involve the regulatory and legal questions raised with follow-on products licensed under the Public Health Service Act. These issues involve: protein products with unknown or multiple active ingredients (rhGH products have one known active ingredient, somatropin); protein products that are difficult to characterize (currently available technologies allow rhGH to be extensively characterized); protein products that are glycosylated (rhGH is not glycosylated); and protein products that have an unknown mechanism of action (rhGH's mechanism of action is well understood) (3). 

In its statement, the agency also pointed out that Omnitrope is not FDA's first approval of a follow-on protein product. Other follow-on protein products approved under section 505 of the Food, Drug, and Cosmetic Act include: "GlucaGen"(glucagon recombinant for injection), "Hylenex" (hyaluronidase recombinant human), "Hydase" and "Amphadase"(hyaluronidase), and "Fortical" (calcitonin salmon recombinant) nasal spray (3). 

Although the regulatory framework for biosimilars is more defined in Europe, the United States is moving toward standardized pathways for biogenerics, although this is a slow and evolving process, which is expected to continue over the next few years, with several legislative initiatives under consideration. The key issue for the US market, therefore, relates to the vast majority of biologics, which are regulated under biologics  license applications (BLAs) rather than NDAs (1). 

1. P.Van Arnum, "The Changing Fortunes of APIs," 

2. E. Greb, D. McCormick, P. Van Arnum, "Pharmaceutical Technology's 2005 Manufacturing Rankings," 

3. FDA, "Omnitrope (somatropin [rDNA origin]) Questions and Answers," (Rockville, MD, 2006), 

www.fda.gov/cder/drug/infopage/somatropin/qa.htm

Articles

Global Feature

Double-digit growth is projected for the US generic drug market, and the industry positions for opportunities in biosimilars.

Opportunities Abound for Generic Drugs

 named Patrik Wohlhauser, currently head of the exclusive synthesis & catalysts business unit, as an executive director of Degussa GmbH. From July 1, 2007, his new responsibilities will include, among others, the new international sales function of RAG's subsidiary Degussa. Wohlhauser will also be the management board member responsible for the Consumer Solutions reporting segment and for the Western and Eastern Europe regions. His successor as head of the exclusive synthesis & catalysts business unit will be Rudolf Hanko, who currently heads the exclusive synthesis business line of the same business unit. 

  appointed Catherine J. Hardalo, MD, vice-president of clinical development. Hardalo joins the company from Schering-Plough Research Institute, where she directed the clinical development of antimicrobial products. 

–Carol G. Gallagher was promoted to senior vice-president of corporate development and commercial affairs with 

. Gallagher joined the company as vice-president of commercial affairs in April 2006. She previously served as vice-president of sales, marketing, and product planning at CancerVax Corporation and senior director of oncology marketing at Biogen Idec, Inc. 

  named Rob Frankenberg, PhD, vice-president of drug manufacturing. Frankenberg joins the company after serving in various positions with Bayer HealthCare. 

  named Bruce DeChambre vice-president of commercial and business development. DeChambre previously was vice-president of sales and marketing at SAB-Pharma. He also held positions at Abraxis Pharmaceutical, Fujisawa USA, Inc., and Baxter Healthcare Corp. 

–Timothy P. Walbert was named chief executive officer of 

. Walbert previously was executive vice-president, commercial operations with NeoPharm, Inc. 

  promoted Frank Deane to president of manufacturing. Deane is currently vice-president of quality. He joined Lilly in 1979 at the company's manufacturing operations in Kinsale, Ireland. 

–Robert M. Haggerty was appointed vice-president of quality with 

 Haggerty served as director of quality assurance at Alexion Pharmaceuticals and held various positions at Ben Venue, Dupont, and Transkaryotic Therapies. 

News

People

Times have never been better for providers of clinical and nonclinical drug development services. The number of early drug candidates has jumped 50% over the past four years, fed by a continuous flow of venture capital and Big Pharma's desperate need for more new product candidates. Backlogs at the major CROs have grown 30% in the past year, foretelling a wave of new Phase III clinical research activity. 

It's truly a seller's market right now, and most contract research (CRO) and manufacturing (CMO) service providers are benefiting. In such a robust environment, it's easy for CRO and CMO executives to get complacent. After all, new business seems to just walk in the door, and price resistance is low because clients are so desperate to get compounds into the clinic as quickly as possible.  

In this environment, we see contractor executives falling into two categories: those who are lucky and those who are smart. Executives in the lucky category are content to ride the high tide of prosperity with little thought to what happens if the market weakens, while smart executives are those who are using their current good fortune to build a basis for lasting success. 

Here's how to determine whether your company's management is lucky or smart. 

If your business is growing at 10% per year or less, you are more lucky than smart.

				 Publicly traded CROs and CMOs have routinely reported revenue growth rates of 12–20% over the past two years. Service providers that are growing slower than that are doing no better than holding their own, and they may actually be losing market share. Smart executives are looking for ways to distinguish their companies so as to be able to grow faster than the market and secure lasting relationships. 

If your business is largely dependent on venture capital-backed bio/pharma companies, you are more lucky than smart.

 Major pharmaceutical companies are concentrating their spending with the largest CROs and CMOs, so smaller service providers are increasingly dependent on the trickle down of venture capital from early stage bio/pharma companies. The level of venture capital funding fluctuates from year to year, and just the prospect of reduced funding can cause small bio/pharma companies to cut back on spending to conserve cash. Large and midsize bio/pharma companies fund their development activities internally, and their spending is more consistent. 

If your company is not investing in sales and marketing because you have enough business coming in unsolicited, you are more lucky than smart.

 Now is the time for service providers to be investing in brand building and relationship development: the higher profit margins resulting from current business activity provide resources for advertising, trade shows, and targeted prospecting. The objective of these efforts is two-fold: to improve the quality of the current customer base and to provide a basis for sustained performance when market conditions are less favorable. 

If your company is growing by over-promising and under-delivering, you are more lucky than smart.

 Rapid growth stresses a company's physical, project management, and executive capacity. In the current environment, many service providers are taking on more business than they can handle and disappointing clients with missed deadlines and performance promises. Clinical packaging providers seem to be especially prone to this problem, and major pharmaceutical companies are victimized almost as much as smaller companies. Poor performance erodes client loyalty, which will be critical during periods when demand is not so robust. 

If your company is turning away business because it can't handle any more, you may be lucky or smart.

 Turning away business because you can't meet the client's requirements is a good practice—to a point. Turning away too much business can hurt a company's reputation in the market, and it may be a symptom that management isn't being aggressive enough. If a company isn't investing in more capacity to meet the growing demand, it suggests that management is too contented or too scared to take some risks necessary to make the business a long-term player in the industry. 

Smart CRO and CMO executives are using the strong current market environment as an opportunity to establish a solid long-term base for their companies. They are investing in business strategies and capabilities that distinguish them from the pack and will position their companies for success even if financial support for early-stage companies declines. They want to make sure they create their own luck in the future. 

The big news at this year's Interphex trade show in New York was the sale of contract injectable manufacturer 

 (Spokane, Washington) to the India-based  

 ((Uttar Pradesh, India,). The sale itself wasn't a surprise—Hollister-Stier was owned by a private equity firm and was often the subject of buyout rumors—but the price and the buyer both raised eyebrows. 

Jubilant is paying $138.5 million for Hollister-Stier, representing a multiple of nearly 13 times Hollister-Stier's profits before interest, taxes and depreciation (EBITDA). That multiple is 30% greater than that paid by the Blackstone Group when it bought 

 (Dublin, OH) Pharmaceutical Technologies and Services business earlier this year. Large multiples are not unusual for platform acquisitions, 

 companies that provide a base from which to build a larger enterprise through additional acquisitions, but they are unusual for niche businesses like Hollister-Stier. 

No doubt Jubilant justified its bid on the prospects for Hollister-Stier's injectable CMO business. Contract manufacturing revenue accounted for just $33 million of the company's $55 million total sales (allergy products accounted for the remainder), but the CMO business grew 33% in 2006 and is expected to accelerate when the company completes installation and validation of a new high-speed filling line and more lyophilization capacity. 

The emergence of Jubilant Organosys as the buyer also was a surprise because there was a presumption in the industry that an Indian company would not pay for a premium property. Indian chemical and dose manufacturers have been active acquirers of businesses in Europe and North America in recent years, but generally these acquisitions have been somewhat distressed operations that most investors have shied away from. Examples include the acquisition of 

 (New York, NY) Morpeth, UK, manufacturing site by Nicolas Piramal, and the acquisition of API manufacturer

However, Jubilant has been aggressive about establishing itself in the contract services space. It acquired US-based clinical CRO Target Research Associates, now known as 

 (Berkeley Heights, NJ) in 2005, and signed a major discovery deal with Eli Lilly in 2006. Its Pharmaceutical and Life Science Products group, which includes contract services and generic API manufacturing, had sales of $232 million in its fiscal year, which ended March 31, 2007. 

The acquisition market for contract services opportunities is characterized right now by many willing buyers but few willing sellers, meaning competition should drive up company valuations. The Hollister-Stier/Jubilant deal suggests that private equity companies won't have the opportunities all to themselves. 

 is president of Pharmsource Information Services, Inc., and publisher of 

Outsourcing

While some companies float with the tide, others grab market share while business is good.

Is Your Company Lucky or Smart?

 (Madison, NJ) Medica Ireland to provide detailed design and construction management services for a new pilot-scale laboratory facility at the Wyeth Grange Castle site, Clondalkin, Ireland. The value of the project is estimated at $40 million. The development includes expanding and consolidating all development activities on site to support manufacturing and finishing operations. 

 (Darmstadt, Germany) formed a multiyear strategic alliance to discover, develop and commercialize aptamer therapeutics with a focus on cancer treatments. The alliance combines Archemix's "SELEX" technology to discover and generate aptamer candidates with Merck's oncology drug development and commercialization capabilities. Merck KGaA will invest $29.8 million in Archemix and will have the option to acquire additional stock upon an initial public offering. 

 (Osaka, Japan) signed a multi-year, three-target agreement that also focuses on the discovery, development and commercialization of aptamer-based therapeutics.  

Under the agreement with Takeda, Archemix will receive a $6 million upfront payment to discover and generate product candidates to three disease-associated targets identified by Takeda. Takeda will be granted exclusive, worldwide rights for research, development, manufacturing and commercialization for any aptamer-based products resulting from the collaboration. Archemix will also receive research funding and clinical development milestone payments for each target selected for development. Archemix will also earn royalties and milestones on worldwide sales of the developed aptamers commercialized by Takeda. 

 added two injectable drug products to its API supply and margin-sharing agreement with 

 (Hyderabad, India). One abbreviated new drug application (ANDA)  drug product is indicated for the prevention of nausea and vomiting associated with cancer chemotherapy, while the other ANDA drug product is indicated in the reduction of renal toxicity and xerostomia in cancer patients undergoing chemotherapy and radiation. Under the API supply and margin sharing agreement that was signed May 21, 2007, Natco will be responsible for the supply of the API for both drug products, while Akorn will be responsible for the manufacturing, regulatory submissions, marketing and distribution in the hospital, clinic, and home healthcare markets in the United States and Canada. 

 received a $1.6-billion contract from the 

 (HHS, Washington, DC) to manufacture and deliver 20 million doses of its smallpox vaccine "Imvamune." 

HHS is supplying a base contract payment of $500 million to support additional research and development of Imvamune for the vaccine's potential use during an emergency. The payment also will fund nonclinical and clinical studies for the vaccine. 

The contract includes advance and milestone payments worth as much as $150 million and contractual options worth $1.1 billion. The contractual-options payment would fund further clinical studies of the vaccine that extend the license to include those infected with HIV, children, and the elderly. The payment also could be used to procure up to 60 million additional doses of Imvamune. 

  was awarded a $2.6-million contract from the  

  (DARPA, Arlington, VA). The contract is to develop and validate a system for accelerated manufacturing of biopharmaceuticals for use in a pandemic. Under the first phase of the contract, Fraunhofer will validate its plant-based technology platform for the production of vaccines and monoclonal antibodies. The company has reached out to members of the industry and academia to help Fraunhofer complete the project. The process will be designed by the Fraunhofer USA Center for Manufacturing Innovation, 

 will scale-up downstream protein purification, 

 will have responsibility for process and facility engineering, and 

 will optimize nontransgenic seed production and storage.  

. The agreement gives Takeda access to BioWa's "Potelligent" antibody-development platform. Takeda will have nonexclusive rights to research, develop, manufacture, and commercialize antibodies based on the Potelligent platform. BioWa will receive upfront and milestone payments, license fees, and royalties on products developed using the Potelligent platform. 

  granted license agreements for its EBx cell lines to several pharmaceutical companies. 

 (London) all have been granted the right to use EBx cell lines to produce seasonal and pandemic influenza vaccines. 

(New York). The four patents in dispute relate to atorvastatin, the key ingredient in Pfizer's blockbuster cholesterol drug "Lipitor." Norwegian courts found that Ranbaxy had not infringed on two of Pfizer's Norwegian patents covering intermediate compounds. The appeals court ruled that Pfizer's Norwegian process patent relating to the process for manufacturing amorphous atorvastatin was invalid. The ruling paves the way for Ranbaxy to market generic atorvastatin tablets in Norway. Pfizer is appealing the case to Norway's supreme court. 

  formed an agrement with two African manufacturing companies, Addis Pharmaceutical Factory in Ethiopia and Varichem Pharmaceuticals in Zimbabwe, to transfer technology related to the manufacture of HIV medication. The agreement is part of Roche's Technology Transfer Initiative, which provides technical expertise and guidance for the processes to produce "Saquinavir," Roche's HIV medication. A team from Roche will work onsite at the manufacturing facilities in Africa and from the company's headquarters in Switzerland to transfer the technology. The companies will be able to produce Saquinavir for Ethiopia, Zimbabwe, and any other country within sub-Saharan Africa or defined as "least developed" by the United Nations. 

 smallpox vaccine, ACAM2000, received positive recommendations from the Vaccines and Related Biological Products Advisory Committee of the 

 (Rockville, MD). The recommendation clears the way for Acambis to form a warm-base manufacturing contract with the 

 (CDC, Atlanta, GA,). Under the contract, Acambis would provide smallpox vaccine production in the United States. 

The latest pacts from the pharmaceutical supply chain.

Agreements and contracts

 (Santa Clara, CA), a private company that develops nonabsorbed drugs for renal disorders, for $420 million. The acquisition includes Ilypsa's ILY101 drug candidate, a late-stage selective phosphate binder that treats hyperphosphatemia in chronic kidney disease (CKD) patients. Amgen also will gain Ilypsa's proprietary, high-throughput, discovery and development platform. 

Under the terms of the agreement, Amgen will purchase Ilypsa for $420 million in cash, and Ilypsa will become a wholly-owned subsidiary of Amgen when the transaction is completed. Ilypsa's shareholders and both companies' boards of directors approved the acquisition. The deal is subject to customary closing conditions and regulatory approvals and is expected to close in the third quarter of 2007. 

ILY101 is an orally administered, nonabsorbed polymeric agent that blocks the absorption of ingested phosphate. Studies suggest that ILY101 may heighten phosphate-binding selectivity and capacity compared with currently available polymeric phosphate-binding agents. ILY101 has completed Phase II trials in patients with CKD who are on hemodialysis. Amgen believes the agent is a strategic fit for its portfolio of nephrology drugs. 

 (Cambridge, MA), a privately held company developing treatments for diabetes and inflammatory disease for $300 million. Alantos' lead drug candidate, ALS 2-0426, is a DPP-IV inhibitor in clinical development (Phase IIa) for the treatment of Type 2 diabetes. The deal is expected to close in the third quarter of 2007. 

 acquired a biologics manufacturing facility in Montreal, Canada from 

  facility will be used to manufacture antibody drug candidates for clinical trials. Work will start to recommission the facility, and AstraZeneca plans to commence full-scale production in 2009. 

In December 2005, DSM mothballed the Montreal facility as part of its strategy for DSM Biologics to focus on the development and out-licensing of a new manufacturing technology platform based on the "PER.C6" human cell line, in a joint venture with the Dutch biotechnology company 

  completed its tender offer for all outstanding shares of 

 (Gaithersburg, MD) AstraZeneca purchased nearly 220,000,000 shares, which represent approximately 91.6% of MedImmune's outstanding shares. AstraZeneca plans to effect a short-form merger on or about June 18, 2007 to complete the acquisition. 

 will sell its manufacturing facilities in Humacao, Puerto Rico and Basel, Switzerland to Legacy Pharmaceuticals International. The sale includes the divestiture of Valeant's product "Reptilase." Terms of the agreement were not disclosed. 

 (Spokane, WA). The total purchase price was $122 million. 

 (New York) in an all-cash transaction.The acquisition's total value is approximately $345 million. Genzyme is pursuing the deal to gain exclusive rights to clofarabine, a cancer drug the companies developed together. 

Genzyme markets clofarabine as "Clolar" in the United States and Canada to treat relapsed and refractory pediatric acute lymphoblastic leukemia (ALL) patients. The United States and the European Union granted clofarabine orphan-drug status for ALL and acute myeloid leukemia (AML). Genzyme seeks to expand clofarabine's use into adult populations, especially to treat AML. 

Bioenvision markets clofarabine in Europe and also markets "Modrenal" (trilostane), a postmenopausal breast-cancer drug approved in the United Kingdom. 

  announced a restructuring plan aimed at reducing its ongoing spending. The company will cut 25% of its staff and reduce its spending by approximately $65 million. Nektar hopes the restructuring will allow it to accelerate the development of its pipeline. 

A roundup of company moves and positioning from the pharmaceutical industry and biotechnology industries, and contract service providers.

Mergers, acquisitions, and restructuring

 (PCS, Kalamazoo, MI) is proceeding with two major moves this year: the implementation of a new manufacturing pact with Asian contract manufacturing organizations 

 (New York, NY) Feucht, Germany manufacturing facility. 

PCS is an operating unit within Pfizer Global Manufacturing (PGM), the manufacturing arm of Pfizer. As part of PGM, PCS provides third-party contract manufacturing services and products to other pharmaceutical companies, explains Michael J. Kosko, president of PCS. PCS consists of two businesses: contract manufacturing of dosage-form products and fine chemicals.  

The fine chemicals business uses Pfizer's Kalamazoo active pharmaceutical ingredients (KAPI) facility in Portage, Michigan, outside of Kalamazoo, Michigan. KAPI is a large multipurpose, pharmaceutical chemical and fermentation facility. It is Pfizer's largest API facility and produces fine chemicals for use in Pfizer's drugs products as well as products for PCS. The site includes people involved in the administration, production, support, and development of APIs and intermediates.  

PCS's fine chemicals business is primarily focused on the sale of steroids and steroid intermediates. PCS's position in steroids dates back to 1949 with the former pharmaceutical company Upjohn, which commercialized the first large-scale, cost-effective synthetic route for glucocorticosteroid. In 1995, Pharmacia & Upjohn was formed from the merger of Pharmacia AB and The Upjohn Company, and in 2000, Pharmacia acquired Searle, the pharmaceutical business of Monsanto. Pfizer then acquired Pharmacia in 2003. 

Given increasing cost-competition in the steroids market, PCS embarked on a new strategy last fall by deciding to outsource part of production to Asia through manufacturing pacts with Shanghai Pharmaceutical and Taiwan's ScinoPharm. 

 "The steroids market is very cost-competitive, and these manufacturing pacts allow us to access lower-cost production for select product and for select steps of the synthesis," explains Doris Scheffel Symonds, vice-president of global marketing for fine chemicals.  

Under the pacts, Pfizer is transferring the late-stage processing of 18 steroid APIs and intermediates to Shanghai Pharmaceutical and ScinoPharm over the next three years, beginning with certain commodity steroid APIs. Pfizer will continue to do the early-stage bioconversion operations at its plant in Portage, Michigan. PCS will also have parallel quality control testing of the APIs performed at the Asian manufacturing facility and then at an external shadow laboratory. In addition to overseeing quality issues, PCS will file all drug master files and maintain distribution and marketing responsibilities of the products.  

PCS expects the first products from the pact, progesterone and hydrocortiscone, to be available by the end of 2008. 

Shanghai Pharmaceutical and ScinoPharm are both adding manufacturing capacity to implement the PCS projects.  

PCS also provides contract manufacturing of solid and sterile dosage forms at facilities throughout Pfizer's internal manufacturing network, a function served as part of PGM's strategy to fully optimize its manufacturing capacity.  

Earlier this year, Pfizer announced its intention to divest its Feucht, Germany manufacturing facility and the related PCS-Feucht business unit. The PCS-Feucht business unit targets specialty APIs and solid-dose manufacturing, including high-containment drug product manufacturing for potent compounds. Pfizer is currently evaluating potential buyers for the unit and hopes to complete the divestment by the fourth quarter of 2007, says PCS's Kosko, adding that the sale of the Feucht facility will not affect PCS's fine chemicals and contract manufacturing business activities.  

Pfizer's plans to sell the Feucht, Germany site is part of an overall strategy by Pfizer to rationalize its internal manufacturing facility. Since the Pharmacia integration began in 2003, Pfizer has been reducing the number of its plants to bring capacity in line with product demand, to eliminate duplication, and to improve manufacturing efficiency. By the end of 2009, the number of global plants will have been cut by almost 50%. This reduction includes rationalization of its internal manufacturing network and the sites included in the sale of Pfizer's consumer healthcare business to Johnson & Johnson(New Brunswick, NJ, 

Pfizer's Feucht facility made a number of investments in 2006, including a new capsule filler for its high-containment drug product area. Completion of these upgrades will be included in the sale of the facility. 

Pharma Partner Focus

Pfizer CentreSource is proceeding with a new plan for the supply of steroids and steroid intermediates through a recently signed pact with two Asian contract manufacturing organizations.

Pfizer CentreSource Moves Forward with Asian Supply Pact

 is planning to build a new,  large-scale manufacturing site in Visp, Switzerland for highly potent active pharmaceutical ingredients (APIs). This large scale capacity expansion will complement Lonza's existing smaller scale facilities for highly potent APIs. 

Lonza will invest more than CHF 80 million ($64 million) in the construction of API capacity and expects to hire approximately 40 new employees by 2009.  

 plans to build a new biomanufacturing plant in Lyon, France, for the production of  "Thymoglobulin"(anti-thymocyte globulin [rabbit]), a treatment used in transplantation. The project represents one of several investments Genzyme is making in its global manufacturing infrastructure.  

  facility in Lyon will replace Genzyme's smaller plant in nearby Marcy l'Etoile and will provide more than twice the manufacturing capacity. Approximately 165 people are employed at the existing Thymoglobulin plant, and Genzyme expects that approximately 50 new jobs will be created when the new facility operates at full capacity. The total cost of the project is expected to be  EUR 105 million ($140 million). 

Construction is expected to begin later this year, and regulatory approvals are expected starting in 2010. Routine manufacturing at the site is expected to commence in 2011. 

In addition to the Lyon project, Genzyme is completing the development of a new plant in Belgium for the production of monoclonal antibodies and proteins and is expanding other facilities, including its Allston Landing protein manufacturing plant in Boston. Genzyme also recently received regulatory approvals for a new filling and packaging facility at its manufacturing site in Ireland, which has become the company's major European center for the final production and distribution of a range of products, including Thymoglobulin. Genzyme operates 15 GMP (good manufacturing practices) manufacturing plants around the world, seven of them in Europe. 

In the United States, Genzyme is currently completing the construction of a new science center.  

   is investing EUR 55 million to strengthen its manufacturing facility and pharmaceutical development center in Dreux, France. The investment will focus on formulation, analytical development, and manufacturing batches for preclinical and clinical research. The company intends to construct two new buildings by 2009 and will renovate an existing building. The investment also is expected to create 85 new jobs 

  introduced the "RapidResponse" DNA vaccine platform, which is designed to quickly produce large quantities of vaccine. The platform uses a cell-free manufacturing process and single-step vaccine purification, which can be easily scaled up by employing larger manufacturing equipment. The process involves the production of a small segment of DNA that includes only those DNA sequences essential for the specific vaccine. 

  discovered a process that could boost influenza-vaccine production. The process increases the virus yield from eggs by retrieving virus from debris in the egg that usually is discarded. Independent testing at the Queen Elizabeth II Health Sciences Center in Halifax, Nova Scotia confirmed that this process doubles the amount of virus recovered. 

  sterile manufacturing site in Bangalore received approval from the 

. The facility manufactures injectables in freeze-dried and liquid vials, prefilled syringes, and dry-powder sterile forms of nonpenicillin and noncephalosporin therapeutic formats. 

    manufacturing facility for nimotuzumab was successfully scaled up to a 500-L-capacity continuous-perfusion fermentation process. Also, Health Canada and a regulatory authority in the European Union inspected and certified the manufacturing process for nimotuzumab and the newly enlarged facility. Nimotuzumab is a humanized monoclonal antibody for the treatment of cancer. 

  a license to manufacture investigational medicinal products at the Eden-operated National Biomanufacturing Center in Liverpool. Eden now has the authority to manufacture biopharmaceutical drug substances for clients to use in EU clinical trials. 

A roundup of manufacturing and service expansions.