Lonza is building a new plant in its home country to become the only contract manufacturer with large-scale capacity for making highly potent active pharmaceutical ingredients (APIs).
The facility will be developed to the tune of CHF 80m (€48m) on the company's existing site in Visp, Switzerland, where it currently has smaller scale API manufacturing facilities. Construction is expected to finish in 2009.
The company said it is undertaking the investment in response to a "growing demand for existing highly potent API products and new API opportunities."
Meanwhile, high potent APIs and hazardous chemistry markets are also fast emerging as viable profitable alternatives to pharmaceutical intermediaries for fine chemicals manufacturers, at a time when this sector is experiencing overcapacity and tough competition from low-cost competitors.
The firm's decision expand in Visp follows closely on the heels of its decision to mothball a site in Maryland, part of its microbial business, which also needed expansion, but the cost was deemed prohibitive as it would have had to have been closed for 10 months.
Instead, Lonza announced its intention to merge its US microbial biopharma business activities in a single location, three months after buying Cambrex's biopharma unit.
The firm said it has now finalised its review of the segment and will consolidate the operations in its Hopkinton, Massachusetts facility, which will become Lonza 's global headquarters for Microbial Pharmaceuticals.
Lonza bought part of the microbial business from Cambrex last February for $50m in cash - the acquired division generated sales of $42m in 2005.
The firm decided to buy the segment to complement its own small- and large-scale microbial biopharma production operations - also based in Visp - with Cambrex's mid-scale manufacturing capability. In addition, it enabled Lonza to save some money by acquiring microbial fermentation facilities that were already up and running and which had received regulatory approval, providing a faster entry into services business with an existing strong customer base, the company said earlier this year.
In the microbial biopharmaceutical business Lonza produces therapeutic proteins, fragmented antibodies, vaccines and other biopharmaceuticals based on microbial expression platforms.
The consolidation move announced yesterday is aimed at strengthening Lonza's position as a custom manufacturer. The company is investing more than $30m in the Hopkinton facility in order to support its process development and manufacturing growth plans.
Both the commercial operations and Biopharma Service activities in Baltimore, Maryland will continue to run as long as necessary, likely to be until the beginning of 2008, the firm said.
"This will allow for securing sufficient supply of all existing commercial products currently manufactured at the site and to ensure a fully compliant technology transfer to Hopkinton," Lonza said.
The relocation from Baltimore and the subsequent development of the Hopkinton site may result in as many as 250 additional jobs in Hopkinton, the company said.
"With the new organisation in place, we will be able to offer our customers a unique service in process development and manufacturing as well as a globally leading technology platform," said Stephan Kutzer, head of Lonza Biopharmaceuticals.
"The consolidation of our microbial biopharmaceutical business in Visp and Hopkinton creates sustainable value for our customers, our investors and accelerates the planed turnaround of the acquired assets."
This announcement also followed a series of heavy investments Lonza made recently in its mammalian cell culture manufacturing operations - another key business for the company. Last month, the contract manufacturer said it would splash out $300m in the expansion of its Portsmouth, New Hampshire biomanufacturing plant. The Portsmouth site is Lonza's largest scale mammalian cell culture plant commissioned to date by the company.
Just two weeks earlier, the Swiss firm announced that it had broken ground at its new biopharmaceutical manufacturing facility in Singapore, following an investment of $350m.
The facility is the company's second in the country and will also be a large-scale commercial mammalian cell culture manufacturing plant with up to four bioreactor trains each with flexible capacity of 1,000 to 20,000 litres.
Biopharmaceuticals are one of the key growth drivers of the pharmaceutical and biotechnology industries, and the sector is booming, with approximately one quarter of new drugs coming on the market being biopharmaceuticals, with annual sales projected to surpass $52bn by 2010.
With biological products due to take centre stage in the pharma industry over the coming years, the contract manufacturer is taking the necessary steps to make sure it is set to grab itself a large piece of the pie, with an expected 90 per cent of sales coming from biopharma operations.