SUBSCRIBE

Breaking News on Global Pharmaceutical Technology & Manufacturing

Headlines > Processing

Read more breaking news

 

 

Patheon well placed if Trump succeeds in bringing manufacturing home, analyst

Dan Stanton

By Dan Stanton+

02-Feb-2017
Last updated on 02-Feb-2017 at 22:14 GMT2017-02-02T22:14:01Z

Image: iStock/JRLPhotographer
Image: iStock/JRLPhotographer

Patheon could reap the benefits of President Donald Trump’s call for increased drug production in the US by upping capacity utilisation an analyst says.

There have been calls by the recently-inaugurated President to bring drug manufacturing back to the US, the latest in a meeting with Big Pharma executives on Tuesday.

“Trump now includes increasing US pharmaceutical manufacturing as part of a long list of economic policy objectives,” said Baird Equity Research Eric Coldwell in a note.

He added if this policy causes a long-term shift in the behaviour or end-users, Patheon could be one of the beneficiaries due to its US network.

“We believe PTHN has meaningful excess domestic capacity, including at its largest site in Greenville, North Carolina, where revenue could up to double under current footprint.”

As well as the Greenville site, Patheon boasts a second North Carolina facility in High Point, as well as its headquarters. The firm also has – with the acquisition of a former Roche site , completed this week – three operations in South Carolina, and sites in Ohio, Missouri, New Jersey and Oregon.

(While perhaps not fulfilling the Whitehouse’s preferences, Patheon’s North American presence also includes a site in Puerto Rico and two in Canada.)

Border Adjustment

Coldwell also noted that Patheon was in a position with “immaterial direct exposure to border adjustment,” referring to the President’s plans to heavily tax goods imported and sold in the US.

“In cases where Patheon manufactures products at ex-US sites intended for the US market, Patheon invoices and ships to the client’s US legal entity. We believe the client would bear border adjustment risk.”

Furthermore, he continues, “drug product components and materials – e.g., vials, stoppers, syringes, capsules – are sourced locally from the supplier and not imported by Patheon.”

Protectionist measures may increase drug prices

Of course we cannot tell how Trump’s concerns about a lack of drug manufacturing on US soil will play out.

But according to Kevin Noonan, partner at Chicago-based IP law firm McDonnell Boehnen Hulbert & Berghoff, such protectionist measures are unlikely to rock the status quo in a deeply globalised industry.

I think the economics are such that companies will do nothing more than provide a token of new US-based drug manufacturing and that President Trump will not be able to force biopharma companies to manufacture in the US,” he told this publication.

“You can do without a new car but you can’t do without your medicine, and tariffs, etc. will just make drugs more expensive at a time when the government is trying to reduce drug costs.”

Related products

Related suppliers

Key Industry Events

CPhI North America

Philadelphia, PA, USA / Conference and exhibition

Read more

Access all events listing