Novartis' Sandoz embarks on €150M antibiotics manufacturing upgrade in Europe

Kundl
Last year, Sandoz teamed up with the Austrian government to boost antibiotics manufacturing at its plant in Kundl, Austria (pictured above). (Novartis)

While much of the pharma industry has shifted its focus away from antibiotics, Novartis' Sandoz unit is doing just the opposite and is charting next steps in a multi-year manufacturing upgrade in Europe.

The generics giant has drawn up plans to invest €150 million ($183.32 million) in facilities in Austria and Spain over the next three to five years. Sandoz also says it will phase out production of oral drug ingredients at a separate plant in Spain, which it plans to shutter in 2024. The move comes after the company teamed up with the Austrian government last year on antibiotics production and inked a $500 million deal for GlaxoSmithKline’s globetrotting cephalosporin business in February.

As part of a tie-up with Austria unveiled in July, Sandoz will invest more than €100 million ($122.21 million) to equip its factory in Kundl, Austria, with new manufacturing tech to produce oral amoxicillin. Amoxicillin is an active pharmaceutical ingredient (API) in the company’s leading penicillin product amoxicillin/clavulanic acid—a generic version of Augmentin. 

The expansion will add around 60 new positions there, with construction expected to kick off in the second half of the year, a Sandoz spokesperson said via email. 

The upgrade should boost the Kundl plant’s profile as the center of Europe’s “only major” end-to-end antibiotics supply chain, Sandoz said. The plant runs the production gamut from API to finished dose form for “many leading antibiotics.”

RELATED: GlaxoSmithKline to shut down antibiotics production, cut 300 jobs in wake of Novartis buyout

Heading east, Sandoz will spend €50 million ($61.10 million) to add new equipment and expand capacity for sterile penicillin APIs and sterile API mixtures at its Palafolls site in Spain’s Barcelona province. The expansion is set to add 63 new sterile antibiotic production jobs, plus 21 new positions for work on another new product, the company's spokesperson said. 

With upgrades plotted in Kundl and Palafolls, Sandoz says it will phase out oral API production at its Les Franqueses site, also in Spain, which the company plans to close in 2024. The plant currently employs 170 people. "We will make every effort to help find solutions for impacted colleagues by the time these changes come into effect over the next three to five years," the spokesperson added. Meanwhile, Sandoz aims to switch over sterile API production from Kundl to the upgraded Palafolls site in 2025.

Sandoz has been on a mission to overhaul its antibiotics business despite significant pandemic headwinds for the Novartis generics outfit as a whole. In the first three months of the year, sales for the Novartis unit dropped 13% at constant currencies. In its first quarter earnings release, the company blamed the downturn on a “historically weak cough and cold season” caused by COVID-19. Sandoz also faces pricing pressure, but Novartis helmsman Vas Narasimhan recently voiced confidence that the unit’s performance would “stabilize … after a challenging quarter.”

RELATED: Sandoz's Enbrel biosim case turned away at SCOTUS, giving Amgen's blockbuster 8 more years of free rein

While the pandemic hasn’t been kind to Sandoz, it was also the impetus for the company’s team-up with Austria in July after COVID-19 restrictions shined a spotlight on the world’s fragile pharmaceutical supply chain. Austria agreed to put up €50 million, while Sandoz said it 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 such as China.

The Kundl plant is the last remaining integrated antibiotics production chain in the Western world, Sandoz CEO Richard Saynor noted at the time.

Then, in February, Sandoz locked up a half-billion-dollar deal for GlaxoSmithKline’s far-reaching cephalosporin business. The company will pay $350 million upfront and up to $150 million in milestone payments for GSK’s Zinnat, Zinacef and Fortum, which are sold in more than 100 countries. GSK will hold onto rights in India, Pakistan, Egypt, Japan and China. The deal, expected to close later this year, also excludes rights in the U.S., Australia and Germany, which GSK previously sold.

The antibiotic trio ginned up sales of $140 million in 2020.