Roche to supersize biologics production to meet biologics' super forecasts

Daniel O'Day, COO of Roche's pharmaceuticals division

Swiss drugmaker Roche has seen explosive growth for drugs like its new breast cancer drug Kadcyla and says it needs a lot more capacity for it and the long list of other biologics in hand or under development. To get that capacity, it will invest 800 million Swiss francs ($881.8 milllion) to build a new facility in Switzerland and expand plants in the U.S. and Germany, adding nearly 500 jobs in the process.

Biologics are large molecue drugs manufactured from living cells rather than chemical synthesis, making them more complex to produce. Roche already is manufacturing a variety of approved biologics like Kadcyla, an expected superstar biologic that combines Roche's ($RHHBY) antibody drug Herceptin (trastuzumab) with drug-conjugate technology from ImmunoGen ($IMGN), but pointed out it has 39 biologics in its pipeline. It was Kadcyla and another new breast cancer biologic, Perjeta, as well as older biologic treatments like Rituxan that powered the company to a 10% hike in profits for the first half of the year. It reported the improved earnings while many other drugmakers were fessing up to disappointing sales.

"As the world's largest supplier of biologics, Roche is committed to making the necessary investments to ensure ongoing supply of these medicines at the highest quality standards" Daniel O'Day, chief operating officer of the pharmaceuticals division, said Monday.

As part of the big buildup, Roche is spending 190 million Swiss francs ($208.9 million) in a new antibody-drug conjugate (ADC) production facility in its home base of Basel, Switzerland, that will create 50 jobs. ADCs are able to target specific cells, delivering drugs where they are needed. It said that facility will give it "additional capacity and flexibility" for Kadcyla, its first approved ADC, as well as 8 ADCs it has under development.

It will invest another 260 million Swiss francs ($285.9 million) to expand biologic manufacturing capacity at its facilities in Vacaville and Oceanside in California, and 350 million Swiss francs ($384.9 million) on beefing up its operations in Penzberg, Germany. The U.S. investments will add about 250 jobs and the German investment another 200, the company said. Roche didn't give any start or complete dates for the work but said it would increase capacity over the next 5 years.

The reception of Roche's Kadcyla and Perjeta, and the projections for their earnings, are indication of why Roche wants to make sure it has plenty of capacity. Perjeta, which was approved in November 2012 in the U.S. for women with advanced HER2-positive breast cancer, last month was also approved to treat patients before surgery. At least one analyst estimates its peak sales could reach $8.5 billion. Kadcyla was approved in February in the U.S. and in September was recommended for approval in Europe.The drug carries a price that is more than twice that of Herceptin, a reported $9,800 a month for the injection, compared with the $4,500 for Herceptin. It also comes with supersized forecasts. Analysts have projected peak sales could range anywhere from $2 billion to $5 billion annually.

- here's the announcement

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