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South Africa & Lonza Venture Hits Delay on API Facility Construction

By Dan Stanton , 27-Feb-2013
Last updated on 27-Feb-2013 at 12:57 GMT

A South African and Lonza joint project says issues in funding, competitiveness and green technologies have delayed construction of its API plant.

The ZAR1.6bn ($180m) venture, known as Ketlaphela, was set up between South African state-owned chemical producer Pelchem and Swiss contract manufacturer Lonza in order to build the country’s first antiretroviral API (Active Pharmaceutical Ingredient) plant. However, after a year the construction has still not been commissioned.

Dominic Werner, Head of Corporate Communications at Lonza, told this publication that the delay is due to “some issues which had to be addressed such as competitive prices, green manufacturing footprint and funding.”

These issues support concerns raised by South Africa’s Director-General of the Department of Science & Technology, Phil Mjwara, who explained in more detail the reasons behind the delay.

Talking with South Africa’s Financial Mail , Mjwara said the lack of clarification of whether the State could compete in price with Indian and Chinese API manufacturers, who currently supply the majority of local drug companies, was a factor in the delay.

Furthermore, he added issues over funding and uncertainty over green technologies – both involving Lonza’s commitment to the project - has led to construction being put back.

As for Lonza’s role in the collaboration, the firm were very cagey about details from the start, denying a South African Government report which stated Lonza would invest $65m in the project during the discussions and negotiations stage.

Werner said “Lonza’s main part in the collaboration was always to be the technology partner” and, again, did not provide any financial details. He explained that Mjwara, however, need not worry about Lonza’s environmental credentials.

“Lonza brings a great expertise in this area, and successfully applies green technology elements such as maximising recycling of reagents and solvents, minimum water consumption or the conversion of waste products into usable energy,” said Werner, using Lonza’s Visp plant in Switzerland as an example.

API Production Still Following Outsourcing Trends Despite South African Strategy

South African resurgence for in-house API manufacture comes as part of a Government initiative to address HIV and AIDS through local production of antiretroviral drugs. It forms part of recent attempts to bolster local drug manufacturing which has seen policies developed by the Government to encourage investment from international companies.

Furthermore, earlier this month, South African drugmaker Aspen Pharmacare  signalled its intention to produce its own APIs by showing interest in acquiring MSD’s (Merck and Co’s European wing) manufacturing facility in Oss, The Netherlands.

However, though these two examples may counter a general industry trend of moving to outsourcing , when asked Werner said: “We consider the outsourcing trend to be intact.”

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