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UPDATE

Sterile injectables M&A could indicate return to in-house production

By Dan Stanton+

22-Jul-2014
Last updated on 05-Aug-2014 at 12:16 GMT

Drugmakers are bringing sterile injectables capacity back in-house according to a Frost & Sullivan analyst, who says industry risk aversion is the key driver.

In the past week , Indian generics drugmaker Sun Pharmaceutical Industries bought the CMO Pharmalucence, which has a 70,000sq ft sterile injectables facility in Billerica, Massachusetts whilst pharma giant Pfizer paid $225m (€166m) to purchase InnoPharma for its injectables portfolio.

Such deals follow Hikma’s acquisition of Bedford Labs  in May, which also gave the generics firm first option to acquire the now defunct sterile injectables wing, Ben Venue Labs.

In addition, Par Pharmaceuticals  and Mylan  have both made acquisitions in the injectables space in the past eighteen months.

The reason for this is a combination of potential sales and risk aversion according to Frost & Sullivan analyst Aiswariya Chidambaram who told in-Pharmatechnologist.com “Injectables are a highly profitable segment with strong pipelines and lots of business opportunities.” 

Previously, “outsourcing was just a cost-cutting tool,” especially for non-injectable dose forms. “Now [pharma companies] are more strategic as to whether to outsource or not, weighing the risks and benefits of investing in their own capacity or choosing a CMO.”

Shortages and Big Pharma

Ongoing shortages of injectables manufacturing capacity, primarily due to regulatory problems at plants run by large sterile manufacturers, including Ben Venue  and Hospira , have also been cited as a cause for pharma firms to shift away from a reliance on third-parties.

J&J’s Janssen, whose cancer drug Doxil was subjected to shortages because of manufacturing issues at Ben Venue, stepped in to run production at the site in Ohio for six months following Ben Venue’s exit in December , and subsequently told Outsourcing-Pharma.com it was looking to keep complex manufacturing in-house.

Eli Lilly also told this publication in May  that though it would did not rule out outsourcing as an option, the growing complexity of its pipeline would see the firm focus more in-house.

UPDATE - the original article stated Pfizer's acquisition of InnoPharma included manufacturing capabilities. However, "Innopharma’s facility in NJ is not a manufacturing facility, so that facility wouldn’t contribute to manufacturing capacity," Pfizer spokeswoman Joan Campion has since told in-Pharmatechnologist.com.

"The Sterile Injectables market is a highly attractive segment in the off-patent pharmaceutical business that is profitable and growing.  Pfizer today is one of the top players in this segment and has key capabilities in manufacturing and commercialization," she continued, adding: "Pfizer sees opportunities for further growth both organically and non-organically include: growing sales in emerging markets; in-house development of new assets; commercialization of advanced technologies, such as pre-filled syringes and IV bags and helping to mitigate global product supply shortages."

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