Novartis subsidiary Lek has opened a new plant in Romania that will supply antibiotic generics and ingredients to markets across Europe.
The generics company, part of Novartis' Sandoz group, has invested $12 million in the plant based at Targu-Mures, part of a $30 million package of investments by the company in Romania.
There has been a trend in recent years for drugmakers to invest in facilities in Central and Eastern Europe, both to stake a claim to an emerging market for pharmaceuticals as CEE states join the European Union, and to take advantage of low labour, set-up and production costs.
A recent report from Cap Gemini Ernst & Young found that Central and Eastern European countries, which offer lower clinical development costs, higher site productivity and less local regulations, could relieve some of the pricing pressures on pharmaceutical firms in Europe.
Focusing on macrolide antibiotics, the 4,550-square-meter complex will include an administration building, laboratories, production lines and storage centre. The facility will provide products for the growing needs of the entire European market, said Sandoz.
Hubert Hirzinger, head of pharmaceuticals at Sandoz, commented that the Romania plant, together with facilities opened in Poland and India this month, will increase the company's cost-competitiveness in the marketplace.
Sandoz business in Romania is operated by Lek PharmaTech, which was placed second on the Romanian generic pharmaceuticals market in 2003, just behind Romania's leading domestic pharmaceutical company Sicomed.
Initially focused on the production of macrolide antibiotics, the plant will have a production capacity of 250 million units per year. Products from the Lek manufacturing site in Romania will be exported to the European Union, as well as to other European markets; exports are expected to reach 80 per cent of production output in the next few years.
The driving force behind this expansion will be the growth of the market for generic drugs, a market currently valued at more than $40 billion at present and tipped to grow at a rate of 10-15 per cent a year, according to a recent report from Cutting Edge Information.