Novartis commits $100M to boost capacity at mAb center in France

Novartis, which has committed about $1 billion to boost its biosimilar production as it makes a major play in that part of the market, will lay out $100 million to expand monoclonal antibody (mAb) capacity at a plant in Europe.

Novartis ($NVS) confirmed today that it is starting work on a project that will boost capacity by 70% at the Novartis Pharma S.A.S. Biotechnology Center in Huningue, France. The news actually came in an announcement by Jacobs Engineering Group which said it has been awarded a contract from Novartis to handle engineering, procurement and construction management.

Jacobs said it will put in new bioreactors and build a second purification line to allow Novartis to manufacture the targeted meds simultaneously. The project is slated to be complete in four years. Novartis did not indicate whether it will be adding jobs at the site, which currently has about 400 employees.

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The drugmaker, which is riding out some financial difficulties, had spent the last several years trimming back excess production capacity in its manufacturing network, closing more than two dozen manufacturing sites and handing off a bunch to GlaxoSmithKline ($GSK) as part of their big asset swap in 2014. In January, Novartis said it intended to organize what is left into one overreaching operation in a further effort to cut costs. Between that and a streamlining of its R&D operations, the drugmaker said it expected to squeeze out about $1 billion in annual costs by 2020.

Those cuts in production for some older meds have come as Novartis has decided to make a big play in knockoffs of blockbuster biologics. It said in June it intended to have 11 biosimilar regulatory filings by the end of next year and approvals for biosimilars of 5 of the best-selling drugs in the market by 2020. To ensure the capacity for that effort, the company said that over the next three years it would complete a $1 billion investment in biosimilar production that began in 2010.

Novartis last month reported essentially flat revenues for Q2 as generic competition began to eat away at sales of its blockbuster cancer treatment Gleevec, one of its mAbs. Operating income dropped by 8% in dollars--4% after stripping out currency effects--to $2.1 billion. Novartis said that operating income for the year might fall as it invests about $200 million to promote heart failure drug Entresto, which had only brought in $32 million in Q2, falling short of expectations.

- read the press release

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