Shire adding in-house Cinryze production after shortage, but continues to shed plants

Shire is scrambling to take some manufacturing of its rare disease drug Cinryze in house after problems at Dutch contractor Sanquin led to a shortage of the drug. The move comes even as Shire has targeted three more plants for elimination as it continues to pare down its production network after picking up a bunch of plants in its buyout of Baxalta.

Shire has already asked the FDA for permission to manufacture Cinryze at one of the plants it got in its $32 billion Baxalta buyout last year and is hopeful that might be in hand so that production can begin in the first quarter of 2018. The drugmaker had earlier said it hoped to bring about 30% of its Cinryze manufacturing in-house. 

The FDA in October also gave it permission to release some previously manufactured lots, as it worked to get on top of the shortage which materialized in August. Manufacturing at the contractor has resumed and inventories are being built back up but it had to move about $100 million in sales from September to October and lost some patients to competing drugs in the process.

“Finally, and most importantly, we clearly apologize to our patients and their families who were impacted by this product shortage and remain deeply committed to improving the reliability of Cinryze supply,” CEO Flemming Ornskov, said during the company’s earnings call Friday. “Ultimately our goal is to have an unconstrained Cinryze supply for both our U.S. and international markets and the patients we serve.”

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While one of its manufacturing facilities will get the added Cinryze production, others will be sold or closed as the drugmaker continues to balance out manufacturing and cut costs. The merger left it with 17 plants and it figures a dozen is all it needs.

It already has deals to sell two of those, a vaccine plant in Europe which Merck & Co. is buying, and a mammalian manufacturing facility in Hayward, California, that Lonza will take. The company will shed three more, Matt Walker, Shire’s head of technical operations said on the call.

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“Between the two companies, the one area of technology overlap was internal biologic capacity which exceeded our future needs. There were also new assets under construction in Covington, Georgia, and Dublin, Ireland, that we decided to continue to progress as we modernize the network,” Walker said.

The savings from this will not show up immediately, Walker said, with about $100 million expected by the end of 2019, which will accelerate to $300 million in annual savings by 2023, he said.

The disclosures came after the drugmaker Friday reported revenues of $3.7 billion—slightly below Wall Street’s $3.75 billion estimate because of Cinryze shortage. An improved gross margin brought diluted earnings per share to $3.81, passing the consensus $3.69 forecast. The drugmaker’s shares have struggled since the Baxalta buyout, hurt further by the exits of several key executives, including CFO Jeff Poulton, who will leave at the end of the year.