Teva and Lonza abandon biosimilars joint venture
pharmafile | July 26, 2013 | News story | Manufacturing and Production, Research and Development | CMO, Levin, Lonza, Teva, biosimilars
Escalating costs have led Teva and contract manufacturing organisation (CMO) Lonza to abandon a joint venture set up in 2009 to develop, manufacture and market biosimilar drugs.
Switzerland-based Lonza made the announcement on the day it reported a larger-than-expected fall in first-half profit, having first suggested it was reviewing the future of the partnership back in March. In addition to the scale of the investment, the CMO said it had underestimated the time it would take to bring the biosimilars to market.
Biosimilar copies of established biologic drugs have been predicted to be a major growth market, but complexities in development and manufacturing as well as uncertain regulatory routes in some markets – including the US – have meant their development remains a somewhat risky venture.
In a related move, the company said it would be closing down a microbial biologics manufacturing facility in Hopkinton, Massachusetts, and consolidating all its activities in this area in its main production plant in Visp, Switzerland.
The decision also means that Lonza will no longer be investing in areas such as clinical development and end-product commercialisation, and instead will return to its core focus on contract manufacturing and cell line development.
Lonza chief operating officer Dr Stephen Kutzer said both companies will continue to “explore opportunities to maximise the value of the investments and progress that the joint venture has made”. The Swiss firm said it has spent around 100 million francs on the project to date.
The companies “remain in agreement that affordable, efficacious and safe biosimilar treatments will bring benefits to patients and better serve these markets”, he added.
Meanwhile, Teva chief executive Jeremy Levin hinted at the decision on the company’s second-quarter results call – a day ahead of the joint venture announcement – saying: “there is significant regulatory uncertainty in the biosimilars area.”
Levin told investors that the ‘prevailing regulatory and commercial circumstance’ had to be taken into account before “taking any decisions on long-term investment” in biosimilars.
Lonza posted net profit of 41 million francs in the first half, down more than 50%, on sales 11% shy of the same period of 2011 at 1.74 billion francs. Costs associated with closing down Hopkinton caused the company to take a 69 million franc charge in the first half.
Withdrawing from the biosimilar project will save 150 million francs over the next three years, said Lonza, which also plans additional cost-cutting at three other production sites that will lead to a reduction in headcount of around 250 workers by the end of the year.
The restructuring should shave around 100m francs off costs by the end of 2016. Meanwhile, Lonza said it was also considering the future of its wood treatment business and may carve out the unit.
Phil Taylor
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