|Lonza's Marc Funk|
Swiss ingredient maker Lonza figures that if you can get in early with a winner, the rewards will be a lot greater. That is what happened when it became the supplier to manufacture Pharmacyclics' ($PCYC) leukemia drug Imbruvica. And so instead of trying to strike a deal with each promising startup, it is turning to their source of funds, the venture capital crowd.
Lonza this year negotiated a 5-year exclusive deal with Index Ventures to develop and manufacture all the biological products for all of the biotech companies in which the venture capital firm is a major investor, Reuters reports.
"These deals are part of our strategy to mitigate volatility and ensure that our assets are at optimized capacity," Marc Funk, who took over Lonza's pharma & biotech unit in July, told Reuters. Having nailed down the Index deal, it is out talking with other investors in hopes of making this a model.
Lonza is not the only company trying new approaches to build business. Swedish CDMO Recipharm today announced it had invested 8 million Swedish krona ($1.2 million) in Isofol Medical, also based in Sweden, for which it will manufacture a drug candidate.
The unit Funk now oversees saw its revenues increase 10.7% in the first half of the year, bringing in 674 million Swiss francs ($739 million). It was a big contributor to the company seeing its profits more than triple in the first half to 140 million Swiss francs ($155.14 million), compared with 41 million francs in the same period last year. The company took a hit earlier in the year because it closed a biologics plant in the U.S. as part of reorganization by CEO Richard Ridinger. The facility had run into FDA issues and so the work was transferred to Lonza's facilty in Visp, Switzerland.
There is growing demand from biotechs for some of the products that Lonza prides itself on producing, like monoclonal antibodies, peptides and drug conjugates. The startups will often outsource those needs because they don't have the money to build their own production facilities. But the business is volatile, Funk explained to Reuters. You never know when a drug candidate that you think has a future is going to go to trial and instead end in failure.
So it hopes that working with the investors will help it sign up more winners, like Pharmacyclics. "We worked with this company when they were a startup and now they are one of the leading stars on the west Coast in the United States," Funk said.
- read the Reuters story
- here's the Recipharm announcement
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