Novartis' under-pressure Sandoz unit offloads Quebec plant to fast-growing Avara

Novartis headquarters
After nabbing facilities from Pfizer, GlaxoSmithKline and AstraZeneca last year, CDMO Avara has bought a Novartis site in Canada. (Wikimedia Commons/Andrew/Flickr)

Novartis has been looking to jettison some assets in its North American generics business, but as it turns out, it is a manufacturing facility in Canada that will be sold off first.

Avara Pharmaceutical Services has inked a deal to buy Novartis Technical Operations’ sterile manufacturing facility and the nearby Sandoz Development Center on Sandoz’s Canada campus in Boucherville, Quebec. The site is the biggest injectables production facility in Canada and provides drugs to the Canadian healthcare system, mostly hospitals, said Avara, which will keep on the 500 workers. 

The companies declined to disclose the financial terms of the deal but a spokesperson for Novartis said in an email that as part of the transaction, Sandoz Canada and Avara will sign a long-term supply agreement that is designed to maintain supply, quality and service unchanged. They also will strike an agreement for development services.

Sandoz Canada is still the owner of the marketing authorizations and intellectual property (IP), as well as products under development, and will continue to have corresponding responsibilities for all of them, while the injectables will be manufactured by Avara.

The purchase is just the latest in a series of buys for the ambitious Avara, which just last year snapped up three Big Pharma sites. And for Sandoz, the deal comes as it wrestles with shrinking prices for its "commoditized" generics and weighs its options for its North American facilities and portfolio. The company already chose to shut down a Colorado plant last year and pare away some of the products made there.

All current employees will stay on in Boucherville, Avara said. The contract manufacturer plans to invests in the site while working to expand its customer roster to take better advantage of the plant's capacity, the company said in a statement. Avara has also signed long-term commitments to continue supplying products made there.

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“We look forward to a seamless transition for employees, patients, customers, partners and other stakeholders,” said Avara CEO Tim Tyson, in a statement. “We are impressed by the know-how at the Boucherville plant and Sandoz Development Center team and intend to leverage their expertise to develop new opportunities in the contract pharmaceutical market, in Canada and elsewhere.”

The Boucherville site has had its share of trouble over the past several years. After the FDA uncovered manufacturing problems at the plant in 2012, the plant had to suspend production of some products and discontinue others altogether. Then, in June 2016, the facility halted manufacturing after union members went on a strike for better wages and pension benefits. Employees said they'd been given extra duties to help meet increasingly stringent requirements from regulators.

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Just last October, Novartis said it planned to shut down another Sandoz plant involved in the FDA's 2012 crackdown, as it sheds "limited growth products" in the U.S. portfolio. The 450-employee facility in Broomfield, Colorado, will transfer its production to North Carolina over the next two years.

Sandoz's desire to slim down was exactly the sort of move Connecticut-based Avara has been taking advantage of as it expands its own network. The CDMO has bought up several Big Pharma facilities lately: In just three months last year, it acquired a GlaxoSmithKline solid-dose manufacturing plant in Aiken, South Carolina, bought a sterile facility from Pfizer in Liscate, Italy, and picked up a solid-dose facility in Reims, France, from AstraZeneca. The Novartis deal, once it clears regulatory reviews, will bring the company’s total facilities to 10.