- Sandoz, the generic drug unit of Swiss pharma giant Novartis, plans to spend more than $175 million outfitting its European hub for antibiotics manufacturing with new technology.
- The investment comes from both Sandoz and the Austrian government, and is meant to strengthen Europe's competitive position for manufacturing key antibiotics. Sandoz said Monday that, over the next five years, it will pump more than 150 million euros into its hub in Kundl, Austria, to develop and implement technology used to manufacture active pharmaceutical ingredients and finished dosage forms.
- The roughly 50 million euros, or $60 million, that's being provided by the Austrian government will first go toward technology used to make the active ingredients in penicillin products. In exchange for that money, Sandoz would commit to penicillin production in Europe for the next 10 years, despite what the company describes as "fierce global price competition, particularly from China."
The coronavirus pandemic put a spotlight on infectious diseases and, by extension, a growing crisis surrounding antibiotics. The World Health Organization noted in January how, despite the threat of antibiotic resistant microbes, there remains a serious lack of innovative treatments in development. The organization has warned that without intervention, antibiotic resistance could kill 10 million people each year by 2050.
The scarcity comes in part from the world's most powerful drug companies not seeing much chance for a pay out. In pharmaceuticals, sales are usually tied to how much drug is sold. That presents a problem for new antibiotics, which are cheap relative to other drugs and given sparingly to avoid further fueling antibiotic resistance.
But after years of passing over antibiotics, big pharmaceutical companies unveiled this month a new fund aimed at bringing two to four new options to market by 2030. The fund has raised around $1 billion so far — though it's unclear whether that will be enough to meet its goals, given the notoriously expensive and uncertain process of drug development.
Novartis is one of the 22 companies backing the fund, and has an existing foothold in the space through Sandoz, which it claims to be the world's largest supplier of generic antibiotics.
Sandoz itself is in the midst of a transformation. Sales there have declined because of pricing issues in the wider generics market, leading Novartis to try and keep Sandoz's focus on more expensive products like biosimilars and hard-to-make generics.
Antibiotics, though, remain part of the business as well. Sandoz said its Kundl site can currently meet the potential demand for penicilin across all of Europe. The work doesn't stop at penicilin either, as Sandoz touts how the Kundl plant is the "focal point" of its European antibiotics manufacturing network.
"Antibiotics are the backbone of modern medicine and our Kundl facility in Austria is the hub and center of the last remaining integrated production chain for antibiotics in the Western world. This joint investment will help to keep it that way," Sandoz CEO Richard Saynor said in a July 27 statement.
The investment still needs to be formally approved by Sandoz and the Austrian government. The parties said they expect to complete their agreement before the end of the year.