NPS takes steps in new outsourcing plan

By Emilie Reymond

- Last updated on GMT

Related tags: Pharmaceutical industry

NPS Pharmaceuticals has sold two facilities and appointed a new COO
as part of a recently revealed restructuring strategy to rely more
on outsourcing.

The New Jersey-based drug maker has announced plans to sell its former headquarters in Salt Lake City, Utah and has completed the sale of its Ontario pilot manufacturing and laboratory facility. The Ontario plant will net around $4m (€3m) while the company will receive $21m from the sale of its Utah site and equipment - which was recently bought for $20m. NPS will then move its operations to new headquarters in New Jersey later this year, the company said. Gerard Michel, chief financial officer of NPS, stated: "These transactions are an important part of our restructuring program and reflect our focus on increasing the company's operating flexibility and strengthening its financial position." ​ The restructuring strategy was first announced last March when the company released its annual financial results. As part of this new business plan, aimed at boosting the development of its late-stage pipeline - which include PREOS (full-length parathyroid hormone [rDNA origin] for injection) and teduglutide - the company said it would increase its reliance on outsourcing to reduce costs this year. "With this new business model, we will move forward with a consolidated base of operations and a much smaller team working through contract research organisations (CROs),"​ said NPS CEO Tony Coles back in March. "We believe these steps will enable us to maximise the value of our Phase III products while reducing cash burn."​ The company said it expects to cut spending from $113m in 2006 to between $85m and $95m in 2007 and $35 to $45m in 2008 by reducing staff from 196 to 35 employees by the end of 2007, and by outsourcing certain discovery and general and administrative activities. Also as part of this new organisation reshuffle, the firm yesterday announced the promotion of Francois Nader to executive vice president and chief operating officer (COO) from its position of chief medical officer. In his new role, Dr Nader will be responsible for planning and implementing the company's outsourcing business model. He will continue to report to Tony Coles. NPS is following the footsteps of a number of big pharma such as Pfizer and AstraZeneca who have this year announced similar outsourcing strategies in their quest to reduce skyrocketing manufacturing costs. AstraZeneca sold a manufacturing plant in France this week to a contract manufacturer who would supply the drug maker with its products under a new outsourcing contract, as part of a company-wide strategy aimed at reducing exorbitant production costs. "It is cheaper for us to sell the site to a contract manufacturer such as Recip Pharma and then outsource the manufacturing back to them,"​ AstraZeneca spokesperson Joan Pitt told Outsourcing-Pharma.com last week. Drug titan Pfizer announced its plans to double its amount of drug production outsourcing. Back in February, the firm revealed it would shut down two US manufacturing plants as part of a consolidation programmed aimed at saving the business up to $2bn annually. Pfizer plans to reduce the number of its manufacturing sites, while at the same time increasing its outsourcing, especially to lower cost destinations, said David Shedlarz, Pfizer vice chairman during a recent analyst meeting. Meanwhile, the global contract manufacturing market is expected to exceed $26bn by 2011, according to recent market research conducted by Kalorama Information, a division of MarketResearch.com. At the root of this growth are a number of challenges that pharmaceutical companies now encounter, including the erosion of blockbuster sales and the increased generic competition.

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