What have been noteworthy investments and expansions among contract manufacturers, contract development and manufacturing organizations, and suppliers to the pharmaceutical industry? DCAT Value Chain Insights (VCI) examines the key moves.

Mergers and expansions, initial public offerings, and several high-profile expansions are among the highlights in the market in contract pharmaceutical manufacturing and related services. Chief among them are two large-scale acquisitions, expected to close in 2015: Merck KGaA’s pending $17-billion acquisition of Sigma Aldrich, a move to strengthen the life-science supply organization of Merck KGaA, and Pfizer’s pending $17-billion acquisition of Hospira, which includes Hospira’s contract parenteral drug manufacturing operations.

A look at  key moves
For the pending combination of Merck KGaA and Sigma Aldrich, the combined company will serve the life-science industry with more than 300,000 products, which includes a range of products across laboratory chemicals, biologics, and reagents. In pharma and biopharma production, Sigma-Aldrich will complement EMD Millipore’s existing products and capabilities with additions along the value chain of drug production and validation. Merck KGaA said it plans to maintain a significant presence in St. Louis, Missouri and in Billerica, Massachusetts following completion of the transaction, as well as in important EMD Millipore sites, such as Darmstadt, Germany and Molsheim, France. Based on fiscal year 2013 financials, the combined businesses had combined sales of EUR 4.7 billion ($6.1 billion).

Another important move in 2014 was the initial public offering of Catalent Inc., the parent company of Catalent Pharma Solutions, and in 2015, the announcement of a secondary follow-on offering, the proceeds of which are used in part to fund ongoing expansions. Examples of recent investments include new facilities for the company’s softgel and clinical supply businesses in China and Brazil, a new $20-million Biologics Center of Excellence for cell-line development and biomanufacturing in Madison, Wisconsin, and a $35-million ongoing expansion in the company’s Oral Advanced Technologies manufacturing site in Winchester, Kentucky. The company also acquired the remaining stake in Redwood Bioscience Inc., which includes the SMARTag Antibody-Drug Conjugate (ADC) technology platform. Other investments announced by Catalent in 2014 included: plans to install new automated prefilled syringe clinical packaging lines at its Philadelphia Clinical Supply Center of Excellence; plans for a dedicated laboratory at its Kakegawa, Japan site to provide proof-of-concept support and feasibility studies for Catalent’s proprietary Zydis Orally Dispersible Tablet (ODT) technology; and an expansion of manufacturing capacity for its OptiGel Micro softgel technology. Also in 2014, Catalent acquired Micron Technologies, a provider of particle-size engineering technologies and announced an expansion of its highly potent and cytotoxic clinical drug packaging capabilities at its facility in Kansas City, Missouri.

Earlier this month, Catalent Pharma Solutions announced an expansion of European Clinical Supply Services network relating to specialty clinical packaging for highly potent or temperature-sensitive products. The company is also is expanding its potent handling and manufacturing capabilities at its facility in Somerset, New Jersey. The company also added new coating and blister packaging equipment at its softgel manufacturing facility in Eberbach, Germany. Coating services were scheduled to be operational in early 2015, with the packaging equipment expected to be on line in the middle of the calendar year.

In September 2014, DPx Holdings B.V., privately owned by JLL Partners and Royal DSM and the parent company of Patheon, completed the transaction to acquire Gallus BioPharmaceuticals, LLC, a contract manufacturing company specializing in biologics. Patheon’s biologic drug substance business, a unit of DPx Holdings, includes four global facilities in Europe, Australia, and North America. The addition of Gallus BioPharmaceuticals provides Patheon with additional biologics capabilities, namely process development as well as clinical- and commercial-scale manufacturing of mammalian cell-culture derived products. Patheon gained drug-substance biologics capability with the merger of Patheon and DSM Pharmaceutical Products to form DPx Holdings, a deal which was completed in March 2014, and the subsequent integration of the Biosolutions and Biologics businesses of DSM Pharmaceutical Products into Patheon.

In a subsequent move, DPx Holdings B.V. and its business unit, Patheon announced that it will expand operations in Pitt County, North Carolina, according to an announcement by North Carolina Governor Pat McCrory and North Carolina Commerce Secretary Sharon Decker. The company plans to invest $159 million to increase the site’s capabilities as well as modernize the site and develop energy-efficiency programs at the facility.The investment will also make the Greenville site home of Patheon’s North American Sterile facility as well as boost growth for its Pharmaceutical Development Services offering, which will be built out at the site. In North Carolina, DPx Holdings’ US headquarters is located in Durham and the company also has a manufacturing facility in High Point.

In a large deal of specialty and fine chemicals in 2014, Albemarle Corporation and Rockwood Holdings, Inc. entered into a definitive agreement under which Albemarle will acquire all outstanding shares of Rockwood in a cash-and-stock transaction valued at approximately $6.2 billion. The boards of directors of both companies have approved the transaction. The transaction is subject to shareholder and regulatory approvals and other customary closing conditions and is expected to close at the end of the first quarter of 2015.

More mergers and acquisitions
Chemicals/active pharmaceutical ingredient (API) manufacturing (small molecule and biologics). Thus far in 2015, there have been several deals involving suppliers and contract service providers of both chemical API and biologics manufacturing. Earlier this month, Bachem, a peptide manufacturer, agreed to acquire American Peptide Company, Inc. (APC), based in California. APC provides a wide range of services from small-scale catalog peptide business and custom synthesis to large-scale manufacturing of peptides under cGMP. The company runs two sites at Sunnyvale and Vista, California and has 86 employees.

Also this month, JSR Corporation (JSR), along with Tokyo-based CMIC Holdings Co. Ltd. (CMIC) and Innovation Network Corporation of Japan (INCJ), agreed to acquire KBI Biopharma, Inc., a biopharmaceutical contract development and manufacturing organization (CDMO) with facilities in Durham and Research Triangle Park, North Carolina and Boulder, Colorado. Following completion of the acquisition, JSR will own the majority interest in KBI within the acquiring group. KBI provides microbial and cell-culture process development and manufacturing services for protein production. In addition to the acquisition of KBI, JSR and CMIC entered into a joint project to develop design and manufacturing processes and process materials for antibody-basd pharmaceuticals. Also, Enteris BioPharma, Inc., a provider of formulation services for proprietary drug delivery technologies, including oral peptide drug delivery, launched earlier this year contract manufacturing within its facility in Boonton, New Jersey for the production of APIs using microbial expression systems. The contract manufacturing services cover preclinical to commercial scale.

In 2014, AMRI acquired Cedarburg Pharmaceuticals, based in Grafton, Wisconsin, and a contract developer and manufacturer of APIs and intermediates for both generic and branded pharmaceuticals. Also in 2014, CellMark Chemicals, a division of Gothenburg, Sweden-based CellMark AB, completed its acquisition of AnMar International Ltd. AnMar, located in Bridgeport, Connecticut, is a manufacturer and distributor of a wide variety of vitamins, plant extracts, nutraceutical ingredients, amino acids, and other fine chemical-related products. CellMark Chemicals deals primarily with organic, inorganic, specialty, and fine chemicals and active ingredients. Its portfolio of more than 500 products are sold into the industrial specialties, health, and personal care markets

In 2014, Johnson Matthey, a provider of pharmaceutical services, APIs, and catalyst technologies, completed its acquisition of pharmaceutical manufacturing capacity in Scotland. The 109,000-square meter site was acquired to meet increasing demand for custom pharmaceutical services and active ingredients. Located in Annan, Dumfries and Galloway, the site was originally commissioned and constructed by Glaxo in 1980 and was most recently owned by Bakhu Pharma. A multi-million-pound refurbishment is underway to update and enhance the operational and quality standards of the facility. Refurbishment at the Annan facility was scheduled to start in early 2015, and the site is expected to be fully operational by early 2016.

Also in 2014, Vertellus, a producer of pyridine and pyridine derivative chemicals, purchased Pentagon Chemicals (Holdings) UK Ltd., a manufacturer of fine and specialty chemicals. The acquisition expanded Vertellus’ manufacturing presence in the agrochemical and pharmaceutical sectors and complemented Vertellus’ chemistries with Pentagon’s capabilities in phosgenation, chlorination, Grignard reactions, and sodium dispersions. Vertellus is headquartered in Indianapolis, Indiana. Pentagon’s fine chemical business is based in Halebank, Widnes, the UK, and its specialty chemicals business is based Workington, Cumbria, the UK.

In September 2014, WuXi PharmaTech (Cayman) Inc., a pharmaceutical, biotechnology, and medical device research and development outsourcing company with operations in China and the United States, acquired XenoBiotic Laboratories, Inc., a contract research organization specializing in bioanalytical, drug metabolism, and pharmacokinetic services. Earlier this year, WuXi’s manufacturing subsidiary, Syn-The-All Pharmaceuticals Co., Ltd., begun construction of a new R&D and cGMP manufacturing site in Changzhou, China, about 110 miles west of Shanghai. The new campus will be constructed in phases and include both research manufacturing and commercial manufacturing facilities. Facilities constructed in Phase 1 will double the company’s current manufacturing capacity and be operational by the fourth quarter of 2015. Upon completion of the entire project, the site will triple current capacity and have the capacity to house more than 1,500 employees, including chemists, production staff, and supporting staff. WuXi also broke ground on a new facility in Philadelphia for the manufacture of cell therapies. The facility is expected to become operational in the second quarter of 2015.

Formulation development/drug product manufacturing. Several companies announced expansions thus far in 2015 and in 2014. In 2015, Piramal Enterprises Limited invested $30.65 million toward acquiring Coldstream Laboratories Inc., a contract development and manufacturing organization (CDMO) focused on the development and manufacturing of sterile injectable products and based in Lexington, Kentucky.

In 2014, AMRI acquired OsoBio, a manufacturer of injectable drug products. Its expertise in large-scale commercial production is complementary to AMRI’s early-stage drug product manufacturing capabilities. The acquisition enables AMRI to provide sterile fill/finish services from Phase I development to commercial supply. OsoBio is located in Albuquerque, New Mexico. Its core capabilities include liquid fill and lyophilized products, highly potent compounds, cytotoxics, proteins and peptides, monoclonal antibodies, vaccines, liposomal suspensions, and controlled substances. Earlier this year, Aptuit divested its aseptic clinical manufacturing site in Glasgow, UK to AMRI and entered into a definitive agreement with AMRI for AMRI to acquire Aptuit’s West Lafayette, Indiana solid-state chemistry business for a total consideration of $60 million.

In November 2014, Consort Medical acquired the CDMO Aesica Pharmaceuticals Limited for £230 million ($373 million). Consort Medical is focused on developing and manufacturing disposable medical devices for drug delivery, including inhaled, nasal and injectables products through its core operating division Bespak. Aesica provides contract development and manufacturing services for finished dose and APIs.

In 2014, Xellia Pharmaceuticals acquired Fresenius Kabi’s lyophilized vial manufacturing facility in Raleigh, North Carolina. The deal included a continuous manufacturing and supply agreement with Fresenius Kabi USA. The manufacturing site is located close to Research Triangle Park and is Xellia’s first facility in the US and expanded the company’s manufacturing capacity for injectable pharmaceutical products. The move reflects Xellia’s strategy to add capabilities in supplying finished dosage forms. in addition to its expertise in supplying APIs. The acquisition is part of the latest phase of Xellia’s ongoing global expansion plans, which included an investment of $2 million at the company’s Product and Innovation R&D Center of Excellence in Zagreb, Croatia in 2014.

Also in 2014, DPT Laboratories, a CDMO focused on semi-solid and liquid dosage forms, acquired Meda Pharmaceuticals’ Lakewood, New Jersey facilities. The acquisition expanded DPT’s footprint in Lakewood by adding two buildings totaling 90,000 square feet of space, which include additional cold storage and a larger analytical laboratory. As part of the acquisition, DPT absored Meda Pharmaceuticals’ employees to continue the manufacturing of MUSE (alprostadil), an urethral suppository product. Meda Pharmaceuticals Inc. is the US subsidiary of the Solna, Sweden-based pharmaceutical company Meda AB. In November 2014, DPT also expanded its high-speed bottle filling center at its San Antonio facility. One of three DPT Centers of Excellence, the San Antonio location is purpose-built for semi-solids and liquids to support pharmaceutical manufacturing. The new high-speed bottle filling center provides large-scale production capacity.

Recipharm AB, a CDMO based in Jordbro, Sweden, completed its acquisition of Milan-based Corvette Pharmaceutical Services Group from the Italian private equity Group LBO Italia Investimenti s.r.l. for EUR 120 million ($160 million) in 2014. Corvette Pharmaceutical Services Group (consisting of Corvette Group SpA and LIO Immobiliare s.r.l.) has three manufacturing facilities located in the Milan region of northern Italy. The Masate site has a sterile injectable manufacturing facility with capabilities for both lyophilization and liquid filling of vials and ampuls, including hormones. The Paderno Dugnano site has an API and finished dose form development and manufacturing facility with a number of owned product rights, including erdosteine, an important mucolytic product.The Lainate offers bulk lyophilization of sterile beta-lactam antibiotics supplied to numerous markets. Also, in 2014, Recipharm later acquired Flamel Technologies SA facility located in Pessac, France and Lusomedicamenta, a CDMO based in Lisbon, Portugal.

In 2014, to strengthen its position in sterile filling, Siegfried Group agreed to acquire Hameln Pharma, consisting of Hameln Pharmaceuticals GmbH and Hameln RDS GmbH, for approximately CHF 60 million ($62 million).

A look at key expansions
Chemicals/API manufacturing (small molecule and biologics). Several companies are expanding API manufacturing capactiy. Earlier this year, Cambrex initiated an expansion of its Charles City, Iowa facility to meet demand for contract chemical API manufacturing. The company expects to invest between $45 million and $50 million during 2015, which includes a cGMP production facility and related supporting infrastructure. This project is expected to be completed in early 2016 and is designed to allow Cambrex to further expand cGMP capacity as future growth requires.

Cambridge Major Laboratories Inc., a supplier of pharmaceutical development and manufacturing services, is investing more than $20 million in its R&D and manufacturing facilities in Germantown, Wisconsin. The project will include a new administrative headquarters as well as an expansion of the company’s R&D and manufacturing capacity. The expansion is scheduled to be completed by the end of 2015.

Also earlier this year, 2015, Laurus Labs Private Limited, India launched a new US pharmaceutical and biotech services entity, Laurus Synthesis Inc.. The new company provides US-based clients with the capabilities of Laurus Labs in India, a provider of chemistry services that offers process optimization, scale-up, and manufacturing of key starting materials, intermediates, APIs, and drug products through its Laurus Synthesis business unit, which has been a part of Laurus Labs since the company’s founding. Laurus Synthesis Inc. has begun offering specialized laboratory services from a new drug-development facility in Woburn, Massachusetts. Laurus Labs has a R&D and scale-up laboratory in Hyderabad, India and large-scale manufacturing facilities in Visakhapatnam, India.

High-potency manufacturing continues to be an active area of investment. In 2014, Lonza started up its second-large scale ADC facility in Visp, Switzerland. Carbogen Amcis, the Swiss-based pharmaceutical process development and API manufacturing company, agreed to take over the operations of a high-containment facility located in Vionnaz, Switzerland. The high-potency facility in Vionnaz opened in December 2005 and was formerly managed by Bachem as an integrated part of its site in Vionnaz. And In May 2014, Novasep completed an EUR 4 million ($5.5 million) investment to expand its highly potent API manufacturing capabilities at its facility in Le Mans, France. The Le Mans production facility combines chemical and purification capabilities to manufacture ADC payloads at commercial scale.

In other investments in 2014, Cerbios-Pharma SA, based in Lugano, Switzerland, began construction of a new building to accommodate R&D (chemical and biological) departments that will include laboratories and related infrastructure. The new building is scheduled to be ready by the middle of 2015. Also in 2014, Neuland Laboratories Ltd. opened a new manufacturing facility, constructed as part of its collaboration with Tokyo-based API Corporation (APIC), a healthcare unit of Mitsubishi Chemical Holdings Group that produces APIs, intermediates and investigational new drugs, along with fine chemicals and reagents. The new facility, which is located in a Neuland complex in Pashamylaram, Hyderabad, India, is the first manufacturing facility that APIC has established outside of Japan. Pursuant to an agreement entered into in March, 2013, Neuland constructed and will operate these manufacturing facilities dedicated to providing APIC with capacity for APIs and intermediates. Almac also is investing $7 million in a collaborative research and development expansion with Queens University Belfast (QUB) for biocatalyst discovery and development.

Formulation development/drug product manufacturing/components. In 2015, Vetter completed the first phase of a new multi-functional building at the company’s Ravensburg Schuetzenstrasse site in Germany. The new facility is expected to to be fully operational by the beginning of 2016 and will contain laboratories and workplaces for Vetter Development Service as well as a secure data center and additional office space with an investment of EUR 26 million ($29 million) investment. Also, earlier this year, Pharmaceutics International, Inc. (Pii), a CDMO based in Hunt Valley, Maryland, completed the expansion of its manufacturing facility.

Cirrus Pharmaceuticals, a Kemwell company, which provides pharmaceutical contract development and manufacturing services, is investing in a flexible cGMP suite in its facility in Research Triangle Park, North Carolina to cGMP manufacturing services for many dosage forms, including inhalation, liquids, topicals, and oral solids. The company expects the suite to be ready for service by April 2015.

In 2014, Almac expanded its UK commercial packaging facility to provide a humidity-controlled blister packaging suite, complete with off-line “just-in-time” blister printing. Almac earlier announced an investment to more than double the existing capacity of its 2-8 °C clinical supply labeling cold room facilities in the company’s European and US-based facilities. The company also is investing more than £54 million ($90 million) over the next several years to expand staffing at two operating business units, Pharma Services, which provides contract development and manufacturing services, and Clinical Services, which provides clinical packaging, labeling, logistics, and clinical supply-chain management services. Almac Clinical Services is also investing in cold-chain storage and distribution facilities and enhanced information technology systems.

West Pharmaceutical Services, Inc. plans to expand its global manufacturing operations to include a new site in Waterford, Ireland. The new facility will produce packaging components for insulin injector cartridges and other high-value packaging components. This site will be a center of excellence for West’s proprietary elastomeric sheeting, which is used to package insulin in pen injectors. Future plans include additional manufacturing space for West’s proprietary injectable component product lines. In 2014, West also dedicated its manufacturing plant in the Sri City Special Economic Zone in India, where the company expanded its seals operations for primary packaging used in injectable medicines.