Hikma acquired Ohio-based Bedford Labs in May for $300m (€225m) and last month took up the option to buy the accompanying Ben Venue Laboratories which has been closed since the beginning of the year after efforts to fix ongoing regulatory problems were deemed “unsustainable” by parent company Boehringer Ingelheim.
Ben Venue comprises four manufacturing facilities and an R&D pilot plant, and is one of the largest sterile injectables sites in the world, but while discussing first half 2014 results the new owners confirmed the site would remain shut for the foreseeable future.
“The plans today are basically to take as much of the equipment that we can find that can be transferred and transfer them over to our other facilities,” CEO Said Darwazah told investors yesterday.
Certain machinery will be transferred to Hikma’s Cherry Hill, New Jersey facility, supporting plans to launch the acquired Bedford assets in the US, as the firm broadens its injectables portfolio to include a number of higher value products.
“We're going to move equipment, especially lyophilizers, to enhance our cytotoxic capabilities, because a lot of [Bedford Labs’] products are oncology products,” Darwazah continued.
“The plan we have in place is a three-year plan that will take the products on to the market by 2017. At the time being, we don't see any need for reactivating the [Ben Venue] facility.”
The decision forms part of Hikma’s strategy to optimise its global capacity utilisation and reduce unit costs, which the firm informed stakeholders would also include moving the manufacture of oncology drugs to Germany and adding capacity at its facility in Portugal.
Ben Venue Costs
Ben Venue was the oldest contract developer and manufacturer of sterile pharmaceuticals in the US and was bought in 1997 by Germany’s Boehringer Ingelheim .
In 2011 the site voluntarily suspended production following quality concerns and drug recalls, which later led to a consent decree . Despite investment of over $350m in remediation efforts, Boehringer-Ingelheim announced its permanent closure last year.
Keeping Ben Venue inactive will not lead to extra rehabilitating expenses but Hikma will be hit with some operating costs relating to the hibernation of the site, the tech and product transfer, and the integration of Bedford’s R&D team.
For the first half 2014, Hikma’s total revenues rose 16% over the same period last year to $738m, attributed mostly to a 41% increase in its injectables business which offset lower than expected sales in its branded product business.