Novartis bolsters antibiotics manufacturing ties in Europe with €150M Austrian deal

Novartis and the Austrian government will jointly invest €150 million ($176 million) at the company's Kundl facility, the only integrated production chain for antibiotics in the Western world. (Novartis)

Amid a pandemic and its supply chain disruptions, Austria is teaming up with Novartis to make sure essential antibiotics will be available in that country and other European nations.

Novartis’ generics unit, Sandoz, and the Austrian government will invest about €150 million ($176 million) over the next five years to improve antibiotics manufacturing at a Novartis plant in Kundl, Austria, the company said Monday.

The money will be used to develop state-of-the-art manufacturing technology for active pharmaceutical ingredients and finished drugs.

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Austria has pledged €50 million in public funding to the partnership, which would mainly go toward adding new process technology to produce APIs for penicillin.

But it’s not just about Austria alone; under the deal, Sandoz would commit to penicillin API production in Europe for the next 10 years, despite the lower cost of manufacturing in other parts of the world, particularly China, the company said. Kundl, a 28.3-hectare site, can make enough penicillin products to potentially meet all current Europe-wide demand, it added.

Sandoz’s Kundl facility is the last remaining integrated production chain for antibiotics in the Western world, Sandoz CEO Richard Saynor said in a statement. Besides Kundl, the company also has a 21.3-hectare Schaftsau plant nearby that’s focused on biologics production.

RELATED: Novartis promises zero profit for 15 symptomatic COVID-19 drugs in low-income countries

China is known as the leading global supplier of antibiotics. For example, an estimated 90% of antibiotics shipped to the U.S. come from China. So when COVID-19 first triggered nationwide lockdowns in China and blocked cross-border trade—plus a surge in demand as customers stockpiled drugs and COVID-19 patients needed treatment—the Western world was reminded just how ill-prepared it was to defend against disruptions in the supply of these key meds.

Realizing how dependent the U.S. is on foreign-made drug ingredients, especially from China, President Donald Trump has lately been pushing for onshoring of drug manufacturing back to the U.S. One of the administration's moves in that direction includes a $354 million four-year contract with startup Phlow to manufacture ingredients and finished generic drugs for COVID-19, including certain antibiotics.

The Novartis-Austria deal also comes after many Big Pharma companies have pulled back from investing in new antibiotics, despite rising drug resistance. Novartis itself shut down antibacterial and antiviral research at its Novartis Institutes for Biomedical Research campus in California in 2018 and put its projects there up for sale.

But earlier this month, a consortium of 20 pharma bigwigs—including Novartis—set up a new $1 billion fund called the AMR Action Fund that aims to successfully bring two to four new antibiotics to the market by 2030.

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