Amgen strikes deal with Patheon for 'flexible manufacturing capacity'

Amgen CEO Robert Bradway

When Amgen ($AMGN) CEO Robert Bradway announced big job cuts in 2014, he explained that part of the slimming would come from manufacturing its protein therapies more efficiently. Part of that job going forward will fall to contract manufacturer Patheon, which said on Monday that it has a new deal to provide "flexible manufacturing solutions" for Amgen.

In announcing the deal, Amgen said that manufacturing will remain a "core competency" for the Thousand Oaks, CA-based company but that the deal with Patheon offers it additional capacity and flexibility as the company expands into more countries with more products. Amgen drugs include its multiple myeloma drug Kyprolis and its first-of-its-kind cancer fighter Imlygic.

Michael Lehmann, executive vice president of global sales and marketing for Patheon, said the arrangement is a departure from the "build or buy paradigm" and helps companies that are struggling with the difficulties of demand forecasting.

"These flexible capacity solutions require a strategic and collaborative approach--different from the traditional price per batch concept," Lehmann said in a statement.

In a telephone interview, Joe Principe, Patheon VP of strategic partnerships, said he couldn't talk about the specifics of the Amgen deal but that Patheon knows from experience that given the long "runway" needed for planning product launches, capacity forecasting is just never going to be right on the mark. So Patheon has created its new system to provide companies capacity that can expand or contract around their needs.

If a client chooses, they have a dedicated plant built to their specs where they want "to do with what they will," Principe explained. There also is an option to have a particular process or product flow built within one of Pantheon's existing facilities, or a company can say "we need X amount of capacity in X time," and Patheon will provide it.

Amgen's Bradway has been talking for some years about the need to find new ways to manufacture protein-based drugs. As part of its 4,000 job cuts in 2014, Amgen closed manufacturing operations in Colorado and Washington, later selling the Colorado site to AstraZeneca ($AZN). At the time, Bradway said Amgen was "exiting 20-year-old manufacturing technologies" while investing in "cutting-edge technologies that will enable us to rationalize and, we think, make product more reliably and more cost effectively."

Those investments included a $200 million plant in Singapore that incorporates continuous processing. Opened in 2014, Amgen said at the time that it was copying the flexible, modular design of the original plant and starting work on a second facility at the site in Tuas.

- read the announcement