Alvogen makes a $250M biosimilars investment in Iceland

Biosimilars are expected to become a significant piece of the generics business worldwide, and Alvogen, the generics company controlled by Robert Wessman, intends to get a growing share of that action. Alvotech, an Alvogen sister company based in Iceland, is spending $250 million to build a facility there to develop and manufacture biosimilars.

Alvogen is already selling Hospira ($HSP) biosimilars in Central and Eastern Europe, but Wessman sees great potential in biosimilars, thus the decision to manufacture its own biologics follow-ons. Construction began in November on an 11,800-square-meter (127,000-square-foot) manufacturing and biopharmaceutical development facility in the science park of the University of Iceland in Reykjavik. The facility is slated to be complete in the first half of 2016, and the company hopes to have its own biosimilars in the market by 2018 when patents for a number of high-priced biologic drugs will be rolling off. Wessman thinks his home country offers advantages because of its strong regulatory system, low operating costs and its location between the U.S. and the EU.

Alvotech Vice President Halldór Kristmannsson said in an email that the company expects the new facility will create about 200 jobs in Iceland. Alvotech will support Alvogen's current platform in biosimilars. "We are already more than a year into the development of the monoclonal antibodies expected to be launched [in] 2018 and afterwards and our development pipeline includes 6 molecules," he said.

Wessman, CEO and chairman of privately held Alvogen, is an Icelandic entrepreneur who helped build Actavis ($ACT) into a generics powerhouse before cashing out in 2008. Actavis, which had been headquartered in Iceland, sold out last year to Watson Pharmaceuticals, which then took its name and moved it to Ireland to take advantage of the favorable tax rates. According to Reuters, Wessman's investment group bought a 40% stake in Alvogen 5 years ago after he sold his share of Actavis.

By getting into biosimilars manufacturing, Wessman will be competing with his former company, which has a biosimilars partnership with India's Biocon. Pine Brook, NJ-based Alvogen is also moving headlong into a business that requires very precise manufacturing and which has been slow on market growth. The FDA has yet to lay out the rules for manufacturing and selling biosimilars in the U.S., and the market in Europe has been slow to develop--so slow that Norway intends to fund some trials of its own to prove to the medical profession that biosimilars are as effective as their counterparts. Beginning next year, Norway will start a trial comparing Hospira and Celltrion's Inflectra to its reference product, Remicade. Remicade, which Johnson & Johnson ($JNJ) shares with Merck ($MRK), generated more than $2 billion in sales last year in the EU.

- here's the announcement
- and the Reuters story