API maker Cambrex ($CBM) is expanding an Iowa plant to fulfill a new contract. The New Jersey company did not identify the customer but says it will invest $19 million to bump up capacity.
Cambrex spokesman Mark TePaske confirmed for FiercePharmaManufacturing that the plant in Charles City, IA, is the facility being expanded. The investment will add 3,500 square feet of space to the plant, according to the Courier Lee News Service. The plant currently employs about 215 and will add up to 60 jobs over the next three years.
The company is getting about $400,000 worth of incentives from the Iowa Economic Development Authority Board for the project, according to The Des Moines Register.
Cambrex says in a release that the new contract will add $20 million to 2013 revenue and potentially more in 2014 depending on completion of the expansion and "regulatory developments." It is not expected to impact sales or profit in 2012 and does not include any commitments beyond 2014, the company says. The deal provides for a $9.5 million reservation fee to be paid to Cambrex within the next month as an advance against revenue to be earned in 2013. Site preparation at the plant will begin later this month.
The new project has forced Cambrex to revise its capital expenditure forecast for this year to between $33 million and $36 million. The company will invest the majority of the $19 million in the expansion through this year. Its previous guidance was for capital expenditures of $16 million to $19 million.
"We are privileged to partner with this important new customer on such a significant project and are excited about successfully executing our capacity expansion so we can help our customer get this product candidate to market as quickly as possible," Chief Operating Officer Shawn Cavanagh says in the release.
The expansion will not only address this project but also provide the capacity to help with other "growth initiatives," the company says. Charles City site director and Cambrex VP of Operations Joe Nettleton told the Courier Lee News Service that the expansion will put Cambrex in a good position to expand and diversify its therapeutic and pharmaceutical product portfolio.