With cell and gene therapies on the rise, Novartis has made a big shift in recent years away from manufacturing older, less-profitable drugs. Now, the company is offloading two of its Spanish production plants to a Swiss manufacturer looking to jump into the big leagues.
Swiss CDMO Siegfried picked up two Novartis manufacturing sites in Spain to help flesh out its finished drugs portfolio for injectable eye meds, inhaled capsules and oral solid-dose meds, Siegfried said last week.
As part of the deal, Novartis will secure capacity at both sites, including "multiyear purchase agreements" for drugs produced there, according to a release. The facilities will have enough capacity to meet Novartis' demand as well as bring on additional clients, Siegfried said.
Financial terms of the deal were not disclosed, and a Siegfried spokesman could not be reached for comment by press time.
The two facilities, which employ roughly 1,000 workers, will complement Siegfried's existing capacity in eye injectables and solid-dose drugs and bring the CDMO's revenues over $1 billion, the company said.
The El Masnou site, which specializes in ophthalmic injectables and sterile filling, will partner with Siegfried's sites in Irvine, California, and Hameln, Germany, to boost production, the company said. The Barberà del Vallès facility will add "large-scale capacity" for oral solid-dose drugs and inhaled products to complement Siegfried's facility in Malta.
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With two more manufacturing sites off its books, Novartis has made more progress in its effort to center its own manufacturing on specialized medicines, including cell and gene therapies.
Those changes have meant job cuts for some Novartis employees: The company's Grimsby, U.K. operation began laying off its 400 employees in April after a buyer didn't materialize for the site.
Novartis announced in fall 2019 that it would close a production facility at the Ringaskiddy site in Ireland by mid-2022 as it consolidates its active pharmaceutical ingredient operations there. Novartis has been closing and selling off bulk and formulation manufacturing facilities as it shifts away from older meds and generics.
RELATED: Swiss CMO's China plant up and running
Siegfried's Barcelona-area buys come as the contract manufacturer looks to add to its global footprint amid a boom period for the industry.
In 2016, Siegfried opened a facility in Nantong, China, with a 48,000-cubic-foot capacity and about 200 employees. Siegfried broke ground on the project in August 2013 and said it would boast technology compatible with a plant in Zofingen, Switzerland, to make projects between the two more efficient.
The year before, Siegfried paid $302.3 million for BASF's ephedrine, pseudoephedrine and caffeine API businesses, as well as BASF's custom drug manufacturing operation, all in Europe.