Cambrex makes Estonian API biz buy

Cambrex' Swedish arm has agreed to purchase ProSyntest, an Estonian active pharmaceutical ingredients (API) research and development company.

Steven Klosk, executive vice president and COO of Cambrex said the addition of the new business will enable it to "more effectively compete in the high growth early clinical stage pharmaceutical custom development market", and referred specifically to the advantage of its location in Eastern Europe, a region known for its relatively low cost base.

"Cambrex Karlskoga has successfully worked with the ProSyntest chemists for the past fifteen years, and the acquisition of the business is a natural extension of our long standing relationship", added Klosk.

Once the acquisition is completed, the firm will be renamed Cambrex Tallinn. Financial details of the deal were not disclosed.

ProSyntest specialises in chemical route selection and sample generation, scale up of products at kilo lab scale, as well as chiral and organometallic chemistries.

It is only a small enterprise, having been formed in 1990 as a spin off from Tallinn University of Technology, and currently employs twenty five chemists. However, its new owners have plans to move the business forward.

Cambrex said it intends to add more process and analytical chemists at the site and continue early API development work in Tallinn for scale up at Karlskoga as well as its manufacturing facilities, located in North Brunswick and Charles City, USA, and Milan, Italy.

In the past year Cambrex has been undertaking major changes within its business. In October 2006 the company announced it was stripping itself to the core after agreeing to sell two of its three business units and two further manufacturing facilities.

The major shake up was instigated by the firm after it decided to 'consider its strategic alternatives' in order to make a financial comeback.

In the largest acquisition in its company history, Swiss contract manufacturer Lonza bought both Cambrex's Bioproducts and its Biopharma segments for $460m (€367m) in cash in a deal that closed in the beginning of 2007.

It is clear why Cambrex chose to sell its Baltimore-based Biopharma unit - the firm was crushed by a $140.3m loss in Q4 of 2005 and the bleed from the Biopharma unit was blamed for much of the company's financial woes.

The Biopharma unit struggled largely in its failure to offset the volume reduction resulting from the loss of a major contract in 2003 between Cambrex and Transkaryotic Therapies (TKT) to manufacture the drug Replagal, after its approval was rejected by the Food and Drug Administration (FDA).

The unit also suffered particularly from news in November 2006 from its client Nabi Pharmaceuticals that its StaphVax vaccine did not appear to prevent Staph infections in a phase III study involving dialysis patients, ceasing the development program of the vaccine.

On the other hand Cambrex's Bioproducts unit, which included biotech research products and therapeutic cell culture media, as well as contract cell therapy and testing services, was a profitable business and was performing well.

Despite this, Robert Thomson director of Investor Relations at Cambrex told In-PharmaTechnologist.com at the time that the sale would not really come as a surprise to the industry.

"This market area has been very active with mergers and acquisitions over the past few years, with industry players that are much bigger than us, such as Fisher Scientific, Sigma-Aldrich and Invitrogen, having been very aggressive in buying smaller businesses such as ours," he said.

"It was getting hard to compete and it became a case of either grow ourselves or sell the business - which we did - as we knew we could command a good price in the current market."

At the time, Cambrex also revealed its intention to sell two the loss-making facilities in its remaining Human Health segment to Luxembourg-based firm International Chemical Investors.

The facilities, located in Cork, Ireland and Landen, Belgium, manufactured small molecule APIs and advanced intermediates and reported combined sales of $40.4m and an operating loss of $29.8 m during 2005.

"The products being manufactured at these sites are more mature and therefore subject to fierce competition," said Thomson.

"In addition the facilities are in need of substantial expenditures, so we wouldn't have seen a positive cash flow from the businesses for a couple more years."

After shedding its unwanted divisions, a leaner Cambrex then announced its decision to channel its energy into its high potency development (HiPO) business.

In February 2007 the firm revealed plans to build 11,500 square feet of new laboratory space at its Charles City, Iowa site and employ up to 40 new scientists and engineers by early 2008.

"With the number of high potency compounds entering clinical trials increasing, this expansion will help Cambrex strengthen its development pipeline in this strategically important market," said Klosk.

Additions being made include five new process development/kilo lab production suites for high potency APIs as well as enhanced facilities for analytical development and quality control activities.

The expansion will not provide Cambrex with any new capabilities, but is aimed at helping the firm better tailor development and production to the specific requirements of its customers in terms of volume and scale, explained Thomson.