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Article / May 20, 2019

In the drug services industry, growth has no end in sight

C&EN, 20 May 2019

Transformative investments, and capacity expansions abound at CPhI North America

Pharmaceutical services firms attending the CPhI North America trade show in Chicago earlier this month were virtually unanimous in reporting another year of strong growth in a business that has seen no direction other than up for nearly a decade. Investment continues apace, as do acquisitions, with many firms claiming their manufacturing assets are at or near full capacity.

Tied as it is to the drug industry, the sector has long defied traditional economic cycles. Contract manufacturers of active pharmaceutical ingredients (APIs) have also added services, developed expertise in complex chemistry, and generally taken risks to grow businesses in the direction required by customers developing the drugs of the future.

Results this year indicate that many of these risks have paid off. And ongoing investments hint at another round of risk taking on new technologies and service models.

"Business is buoyant, the strongest it's been on record," said Denis Geffroy, vice president of business development for the Northern Irish firm Almac Sciences. "We are approaching 20% growth this year, which is really surprising because we've been growing 15-20% for the last 10 years."

Several factors explain yet another year of strong results, Geffroy said. "First, I like to think we are doing a good job. But the market has improved, especially in the US," he said, citing a steady flow of venture funding for biotech start-ups. Meanwhile, customers continue to bring their outsourcing back to Europe from China, a shift that accelerated with a Chinese crackdown on environmental regulations starting in 2017.

Almac Sciences is experiencing strong growth and is operating near full capacity. The firm plans a major expansion.

Almac has also benefited from a commitment it made to biocatalytic services beginning in 2010. "We are staying ahead of the game, using enzymes not only for chiral molecules," Geffroy said. "About 20% of the compounds we make have got an enzyme somewhere, either in a final step or in an intermediate step." The 2015 acquisition of the Irish firm Arran Chemical was key to developing the service, he added.

At the time, he told C&EN that Almac was "hitting the wall" on biocatalysis capacity. The company is hitting the wall again, according to Geffroy, this time in its core API business. "We are growing so quickly, we are at full capacity at the moment, which is a bit frustrating," he said. "We need more capacity, and we now have the approval from the board to start building an API plant next door to our current plant." The $20 million facility is expected to open in 2021, yielding a fivefold jump in the firm's capacity to make highly potent APIs.

The Portuguese firm Hovione is also expanding. "We acquired a new piece of land in Portugal, a greenfield site, 10 times larger than the site we have," Marco Gil, senior director of commercial services, told C&EN. At the 40-hectare site, a half-hour drive from Hovione's headquarters plant in Loures, outside Lisbon, the firm will add API capacity while expanding in new areas such as flow chemistry and finished-drug production.

The company is already expanding in Loures, where it recently established a continuous tableting line. Spreading out at the new site will give Hovione a chance to broaden its services and establish a full line from early-stage development to commercialization, all in the Lisbon area, according to Gil.

In France, Minakem is building a lab for cytotoxics used in antibody-drug conjugates at its site in Louvain-la-Neuve, Belgium, where it is also installing a high-performance liquid chromatography column, according to Jean-Marie Rosset, vice president of sales and marketing. And the company, last year, completed and $11 million API-capacity expansion in Dunkirk, France.

"We are facing capacity constraint," Rosset said, noting that Minakem is also pursuing an acquisition. "We have been looking for 18 months." The company may acquire R&D or pilot manufacturing assets in the US, he said.

Rosset said that prospects look good for the year ahead. "We have a lot of stuff in the works that will require scale-up," he said. "The problem is where to put these products. But that's a good problem to have-better than empty capacity."

Helsinn finds itself in similar straits, according to Sandra Moro, business development director. The company is in the midst of a $20 million project at its Biasca, Switzerland, headquarters to install large-scale cytotoxic manufacturing capability.

 

Marco Gil CPhI North America 2019 | Hovione

 

 

 

 

 

 

 

 

 

 

 

 

We believe in the one-site shop with chemistry, particle engineering, and final product.

Marco Gil, senior director of commercial services, Hovione



The project will free up smaller-scale capacity, Moro said, allowing Helsinn to take on more of customers' early-stage work, such as oncology projects that have been fast-tracked by regulators. "We can go from Phase I to Phase III," she said, referring to stages of drug development, "but we currently have very few early-phase compounds-56% of our compounds are commercial."

Tight capacity has not stifled growth, however. Helsinn's revenues increased about 20% for the second year in a row last year, Moro said.

It's not only European firms that are investing. India's Hikal also has achieved 20% annual growth in recent years, according to Anish Swadi, head of business development and strategy.

The company is also in need of capacity. "We are investing $55 million into assets and infrastructure," Swadi said; this investment will support the company's pharmaceutical chemical and crop protection divisions, which share core chemistries. The new capacity will expand continuous manufacturing and biocatalysis capabilities, he added.

Some of the firms that disclosed expansions at CPhI did so on top of large acquisitions. Executives from such firms discussed integrating internal and external investments to create full-service offerings for their drug-industry customers.

Catalent recently announced a $1.2 billion acquisition of the gene-therapy specialist Paragon Bioservices, setting itself up in an increasingly competitive new field in drug development.

Separately, the company is investing more than $200 million to expand its monoclonal antibody (mAb) and other large-molecule production capabilities in Madison, Wisconsin, and Bloomington, Indiana. It's adding fill-and-finish and associated analytical and packaging capabilities as well, to "take your mAb from preclinical all the way to commercial," said Elliott Berger, vice president of global marketing and strategy.

Although Catalent doesn't manufacture pharmaceutical chemicals, it is looking to bolster its presence in small molecules, where bioavailability-enhancing techniques are of increasing importance. Acquisitions over the past 5 years-including Micron Technologies in 2014, Pharmatek Laboratories in 2016, and Juniper Pharmaceuticals in 2018-have brought in spray drying, formulation, and other services downstream of API production. At the Chicago event, Catalent announced a $40 million expansion of oral-dose capabilities and the addition of spray drying in Winchester, Kentucky.

And the company is also ready to invest heavily in its newest business, Berger said, noting that Paragon is building two commercial production facilities in Baltimore and expanding its relationship with Sarepta Therapeutics, a key customer for its adeno-associated virus vectors. "We have financing secured for larger than the acquisition to fund that," he said.

At CPhI, Lonza announced what it calls a "first in human" service: a combination of API and finished-drug development, formulation, and manufacturing targeted at the 70% of compounds in development that have solubility challenges.

According to David K. Lyon, a senior research fellow with Lonza, the service draws on both internal assets and those acquired in recent years, such as Micro-Macinazione, a Swiss micronization specialist that Lonza bought in 2017. Other assets are as far afield as Bend, Oregon, where Lonza does solubility work; Guangzhou, China, where it manufactures APIs; and Edinburgh, Scotland, where Lonza operates a liquid-drug formulation facility.

Lonza is cuing up these assets to crack the bioavailability case at Phase I and expedite commercialization, especially of fast-tracked projects, Lyon said. It aims to reduce development time from 52 weeks to 32 weeks for customers seeking to file an investigational new drug application with the US Food and Drug Administration.

The small-molecule specialist Cambrex is also putting recent acquisitions together. The company brought in early-stage API development when it bought PharmaCore in 2016 and added early-stage API capabilities and sites in the US and Scotland when it acquired Avista Pharma Solutions last year. It also bought Halo Pharma, a finished-drug producer, for $425 million last year. Cambrex is now better positioned to address the changing needs of innovative drug companies, according to Matthew Moorcroft, vice president of marketing.

Meanwhile, Cambrex continues to invest in large-scale API production. It completed an expansion of its high-potency API plant in Charles City, Iowa, last year. The company is now ramping up continuous manufacturing capabilities at its Highpoint, North Carolina, facility-the former PharmaCore-and its factory in Karlskoga, Sweden.

"To make a long story short, we are excited about what we've done over the last 6 months," Moorcroft said. "Now it's all about delivering."

 

 

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The podcast "The Next Discovery" is a six-episode series created by Observador, a leading portuguese digital newspaper and radio station, in partnership with Hovione. And what if some of the scientific discoveries that can improve the lives of millions of people were happening right now in Portugal? The Next Discovery. Listen to the first episode of the podcast here, featuring Diane Villax, co-founder of Hovione. [English transcription] Welcome to The Next Discovery. This is a series of conversations, created in partnership between Observador Lab and Hovione, an international pharmaceutical company of Portuguese origin, that will open the doors to its world and share real stories of science, innovation and global impact. Over six episodes, we will meet the people behind technologies that help develop and manufacture innovative medicines for the world’s largest pharmaceutical companies that improve the lives of more than 80 million patients every year. I am Nelson Ferreira and, in this first episode, we will discover how an unlikely story, which began in a basement in Lisbon, became a story of global leadership. To talk about this legacy, I have the honour of welcoming Diane Villax, co-founder and non-executive board member of Hovione, who at the age of 91 remains a living witness to this journey. Nelson Ferreira (NF): Welcome, Mrs Diane Villax. Let us begin our conversation in 1959. Hovione was born in an unlikely way, in a basement in Lisbon, founded by your husband, Ivan Villax, by you and by two other partners. How did you manage family life and, at the same time, the birth of a pharmaceutical company, all in the same space? I imagine that created some interesting logistical challenges. Diane Villax (DV): From the beginning, we decided that we would manufacture raw materials for the pharmaceutical industry, that is, the active ingredients of medicines. We had no money, so it had to start from our home, which was in a residential neighborhood in Lisbon. Right from the start, we divided the tasks. My husband, a brilliant Hungarian chemical engineer, would be the inventor, the producer and the salesman, while I would take care of all the administrative side: imports, exports, accounting and banks. I kept those responsibilities for at least 30 years. At the same time, we also thought about the values that would guide us over this long period: transparency, innovation, the pursuit of excellence and great consideration for everyone who would come to work with us over the years. NF: Very early on, your husband made it clear that Hovione would not compete on low price, but rather on quality and on solving complex problems. What was it like to apply this principle of rigour when resources were still scarce? Especially because, from day one, it always seems to me that your objective was global. The world would be your market. DV: From the beginning, we felt that Portugal, with a population of 10 million people, would not be a very significant market, and that the world would be ours. Perhaps we were a little naïve, because we were entering a global market that was already quite sophisticated. But the decision was made and we moved forward. We moved forward and were fortunate that Japan discovered us quite quickly. They came knocking on our door, because of course we did not have the means to knock on theirs. At that time, they did not manufacture; they only formulated, so they needed to buy raw materials. My husband had invention patents for independent processes and there were long discussions. They felt that our technology was good, our IP was very robust and our quality was excellent. This led to a cooperation that lasted 10 or 15 years and was very profitable for both sides, I believe. NF: In the 1980s and 1990s, Hovione took a more significant leap forward. What were the decisions, the technological bets or even the moments of greatest courage that allowed this small Portuguese company to become a leading multinational? DV: In 1982, after a successful inspection by the FDA, the regulatory authority in the United States of America, we entered the American market with our generic doxycycline antibiotic. The inventor’s patent had already expired and we had an independent manufacturing process. It was a huge, demanding and competitive market, but one that respects good service and quality. And it was indeed a major leap, because the market was so large that we had no real sense of what it would mean, and demand was much greater than what we were able to produce. I remember, it must have been the summer of 1983, many people probably had to postpone their holidays to the autumn or winter, because missing delivery deadlines was not an option. Later, in the 1990s, we entered a new business area: services. We realized that large American pharmaceutical companies, as well as small biotechs, were increasingly inclined to outsource the development work for new molecules. This is a very long period, which can take four, six or even 10 years — the development process for new molecules before they are approved by regulators and become commercial products. So we began to offer this development service, and it went very well. From there, we developed new technologies, such as spray drying, for poorly soluble molecules, because this could greatly increase their bioavailability. Today, this services area is our largest business segment. NF: Hovione today works with 19 of the world’s 20 largest pharmaceutical companies. How do you maintain the agile, pioneering spirit that was born in that basement, when today the company has 2,600 employees, more than 300 scientists, and has even become the largest private employer of PhDs in Portugal? DV: Agility has to be maintained. For example, during the pandemic, we suddenly received large, unexpected orders to manufacture a component of Remdesivir, which was the product authorized to help Covid patients. So agility has to be maintained, and we always maintain our quality. Today, with more than 60 years of history, clients come to us because they know they can count on our quality and on our responsibility to produce and deliver on time what they order. NF: There is another impressive figure here. Your products reach 80 million people every year and Hovione participates in up to 10% of the new medicines approved annually by the FDA in the United States. When you look at this impact, do you feel that the dream of 1959 has been fully achieved? DV: I think it has been far exceeded. When we founded Hovione, my husband, who was a scientist, simply wanted to have his own laboratory. But he never imagined that we would develop in such a way that, today, we are sought out by major international pharmaceutical companies, which frequently come to us. NF: This is a series about science, but it is also about people. And the rigour, ethics and long-term vision that Diane always brought to management are still present at Hovione. What message would you leave to the scientists who join Hovione today with the mission of finding the next discovery? From what I understand, Diane makes a point of welcoming them whenever they join the company. DV: Yes. Four times a year, twice in English and twice in Portuguese, I speak to the newcomers at Hovione, giving them a very brief account of our journey, our values, our objectives, our dreams, the challenges we faced and how we overcame them to get to where we are today. And I always recommend that anyone who joins this company must work with passion. They must work with passion and always remember that our work is to produce medicines for those who need them. We have the privilege of serving patients. We are a company that works for society. I think “In it for life”, which is our motto, has a lot to do with us, because we have been here for 67 years as a family company, and that is how we intend to continue for many good years to come. Above all, in the healthcare sector, there is a great advantage, because we can look at the long term. We do not have to think about stock market results every quarter, as public companies do. And, on the other hand, we are here precisely to give life to those who need it. “In it for life.” NF: At the age of 91, how does Diane herself maintain this passion and continue to make long-term plans? DV: Because I was a founder of this company. I see it progressing and developing successfully, so it is a joy for me. And I have a large family coming after me. I have six grandchildren and seven great-grandchildren, and I hope to leave the company to them so that they can continue it as I managed it. NF: That is truly inspiring. Mrs Diane Villax, thank you very much for sharing the memories and inspiration of this legacy, which remains very much alive. It was a privilege. This was the first chapter of The Next Discovery. In the coming weeks, we will continue to open the doors of Hovione to discover how Portuguese talent is leading the world, from complex chemistry to particle engineering, from respiratory therapies to next-generation biological medicines.   You can listen to the next episodes on observador.pt and on your usual podcast platform.    

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Hovione is bringing momentum to the intranasal field after announcing that its lead single-use nasal dry powder device, developed in collaboration with Industrial Design Consultancy Ltd (IDC), is now available for commercial partnerships. The milestone marks the transition from prototype to a fully integrated intranasal drug delivery platform that spans Hovione’s end-to-end partnership capabilities–from API synthesis through advanced formulation and particle engineering to drug product manufacturing, including device supply and advanced analytical tools for nasal performance characterization. The platform’s single-use device is designed to be manufacturable at scale and to leverage existing advanced particle engineering and drug product manufacturing capabilities, a practical advantage that can shorten timelines to clinic and commercialization while reducing development risk and cost. The device’s patented mechanism supports targeted nasal deposition, including access to the upper olfactory region. This enables rapid systemic absorption and potential nose-to-brain delivery pathways that are increasingly important for CNS and emergency-use indications. Beyond the single-use format, Hovione and IDC are advancing a multi-dose variant to broaden applicability across dosing regimens and therapeutic areas. The collaboration is backed by an intellectual property portfolio and initial patent grants, positioning the platform as a turnkey option for pharma partners seeking a single integrated supplier for both drug substance and device. This development arrives as intranasal delivery gains traction for systemic, CNS and rapid-onset therapies. This is precisely the focus of the upcoming 4th Nasal Formulation & Delivery Summit, for which Hovione is a key sponsor. The annual summit unites formulation, delivery and product development leaders to tackle drug-device compatibility, translational preclinical models, and strategies for scalable, regulatory-ready intranasal programs. Hovione’s recent progress will be highly relevant to attendees looking to de-risk nose-to-brain and systemic intranasal programs. Read the full article at News-Medical.net    

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Every year, the largest bank in Portugal, Caixa Geral de Depósitos recognizes some of Portugal’s brightest young minds through the Caixa +Mundo Awards, providing nearly €800,000 in scholarships to students as they pursue higher education. In this year´s edition, Caixa named the award bestowed upon students pursuing science for Diane Villax. This prestigious honor places Diane Villax among the award’s namesakes – a distinguished group of prominent personalities who have made notable contributions to Portugal´s socio-economic, cultural, political and scientific development over the last 50 years, such as António Ramalho Eanes, Mário Soares, José Saramago, Sophia de Mello Breyner, Leonor Beleza, Elvira Fortunato, Rui Nabeiro, Américo Amorim, and José Manuel de Mello. Diane Villax will also honor the seven scientific award winners by personally meeting with each of them, and following their journeys as future innovators and leaders. But this honor is about far more than one individual. It is a celebration of an entire organization and the people behind it. For 67 years, generations of dedicated teams have worked together with passion, purpose, and excellence to manufacture life-saving medicines and advance science that has a real impact on people. This recognition belongs to all of us.    

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