- Amgen Inc. will spend $300 million to construct a new biologics manufacturing facility in the U.S., part of a plan to allocate a greater share of annual capital expenditures toward domestic investment in the wake of changes to the U.S. corporate tax code.
- An exact location is still up in the air, yet Amgen expects the facility will eventually employ 300 high-skilled staff once complete.
- The new plant will follow in the mold of a biomanufacturing facility Amgen built in Singapore between 2013 and 2014, which relies on a modular design and smaller, more adaptable single-use bioreactors.
Boosted by lower expected tax rates, several U.S. pharma companies including Pfizer Inc., Merck & Co and AbbVie Inc. have announced plans for billions in domestic capital spending.
For its part, Amgen expects to spend $3.5 billion in capital expenditures — money used to buy, maintain or upgrade fixed, long-lived assets — over the half decade. That's not too different from its spending habits over the past five-year period between 2013 and 2017, when it spent $3.41 billion.
But Amgen says it will deploy a greater share of that money in the U.S., directing 75% or about $2.6 billion of the total toward domestic investment. In the past, the allocation between foreign and domestic spending has been more like 50-50.
According to the company, a lower U.S. tax rate makes the case to invest more compelling. In 2017, Amgen paid an effective rate of 18% on a non-GAAP basis. Moving forward in 2018, the biotech expects its effective rate to fall between 14% and 15%.
"The timing of tax reform is particularly relevant for us right now as we are on the cusp of deploying our so-called 'next-generation' biomanufacturing technologies," said Amgen CEO Robert Bradway on a Feb. 1 earnings call.
"We developed these technologies in the U.S. and, thanks to tax reform, we will now build new manufacturing capacity and add highly skilled jobs here in the U.S. to capitalize on them."/p>
The planned $300 million plant will be the centerpiece of those efforts, designed to make products for both domestic and export markets.
Traditionally, biologics manufacturing facilities use massive, fixed bioreactors that can handle tens of thousands of liters of cells and growth media. Amgen's facility in Singapore, by comparison, taps 2,000 liter single-use bioreactors that can be adapted to producing different drug products.
Amgen says this type of facility costs a third the investment a traditional manufacturing plant requires and can be built in half the time. The Singapore facility opened just 17 months after Amgen broke ground, although validation and certification extended beyond that timeframe.
For many pharma companies, investing in greater biologics manufacturing capability has become a priority. Utilization of biologics has grown, and large-molecule medicines accounted for about $106 billion in U.S. drug spending in 2016, according to IQVIA.