AstraZeneca, spurred by China’s respiratory demands, expands Australian plant

AstraZeneca is investing $77 million to add three respiratory med production lines at its Sydney, Australia plant to meet rising demands in China. (AstraZeneca)

Air pollution in big cities and a high smoking rate have led to China’s growing demands in respiratory treatments, and AstraZeneca is feeling it. The British pharma is pouring AUD 100 million (about $77 million) to expand production of respiratory medicines at its Sydney site. 

AstraZeneca will use the money to add three production lines to the existing eight, each with the capacity to produce over 70 million units of asthma med Pulmicort Respules per year. The company said in a release that it will boost exports from the site to over AUD 2.4 billion ($1.8 billion) over the next four years, with a further goal of doubling respules production to 1 billion by 2025.

CEO Pascal Soriot announced the plan alongside Australian Prime Minister Malcolm Turnbull during the latter’s visit in London. The upgrade is already underway and will be operational in the first quarter of 2019, according to an AstraZeneca spokesperson.

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AstraZeneca currently has two facilities in China near Shanghai, a tablet and injectables manufacturing plant in the city of Wuxi and a $200 million, 100,000-square-meter plant in Taizhou which produces both intravenous meds and oral solids. But a large amount of respiratory drugs supplied to the market are still produced at the Australian site—currently 90% of the site’s products are shipped to China.

Although labor costs are lower in China, the manufacturing technology “is difficult to replicate,” said Mark Morgan, manufacturing director of AstraZeneca Australia, in a statement.

China has been a driving force for revenue growth at AZ, and respiratory meds are doing especially well. Pulmicort sales in China represented over half of the med's worldwide number, jumping 18% from $485 million in 2015 to $570 million in 2016, and that came off on the back of $348 million in 2014, AZ stated in its most recent annual report. Another asthma drug, Symbicort, enjoyed a 26% sales increase in China, to $156 million from $124 million.

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The company attributed the country’s rising demand for those drugs to “the long-term increase of acute COPD and pediatric asthma.” According to a large-scale epidemiological research carried out by the China Asthma Alliance in 2013, asthma cases in Beijing and Shanghai have increased by 1.5 and 1.9 times respectively in the past 10 years.

China has supported AstraZeneca's overall sales growth, contributing $2.6 billion in 2016, marking a 10% increase on constant exchange rate. The company has also capitalized on recent regulatory efforts China’s FDA made in a continuous effort to speed up drug approval. Its non-small cell lung cancer med Tagrisso earned a nod in just seven months.