Fresenius starts $250M U.S. site expansion

Fresenius Kabi
Germany's Fresenius Kabi has started work on a $250 million expansion of its facility in Illinois.

Fresenius Kabi, which has been spending heavily to broaden its capabilities, has started construction on a $250 million project to expand its sterile manufacturing plant near Chicago.

The German sterile manufacturing specialist last year announced the decadelong, multiphase project to create a campus at its manufacturing site in Melrose Park, Illinois. Melrose Park is about 30 miles from Fresenius Kabi’s U.S. headquarters in Lake Zurich, Illinois.

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The project will include aseptic filling lines, expanded freeze-drying capabilities, formulation areas, a dedicated warehouse for raw materials and components and an administration building with amenities.

The company, which received tax incentives from the state for the project, has said it will add hundreds of jobs. It is slated to be complete in 2026.

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Fresenius in April announced the company would spend $5.4 billion to expand its reach in sterile generics and other new products, including the rapidly expanding area of biosimilars.

It reached a $4.3 billion agreement in its previously announced talks to buy U.S.-based generics maker Akorn, also assuming $450 million in debt. The deal, expected to close in early 2018, will add three U.S. manufacturing sites and one in India to Fresenius’ network, in addition to about 2,000 employees.

Fresenius also agreed to buy the biosimilars portfolio of Germany-based Merck KGaA for €170 million upfront and up to €500 million in milestone payments, about $729.2 million total. Manufacturing of biosimilars will continue at Merck's two plants in Switzerland as part of that deal. Fresenius committed to spending €1.4 billion in total by 2022, including the purchase price, to expand in biosimilars.

Analysts liked the deals, pointing out that the Akorn buy will not only add some heft to Fresenius’ generics portfolio but also expands Kabi into new segments like ophthalmics and topical solutions, segments which might be less vulnerable the generics pricing pressure that has been difficult for drugmakers in last few years. Sterile injectables accounted for about 35% of Akorn's $1.1 billion in sales last year.