AstraZeneca has sold a manufacturing plant in France to a contract manufacturer who will continue to supply the drug giant with its products under a new outsourcing contract.
In an undisclosed deal announced today but signed on Friday, Swedish firm Recip Pharma is now the proud owner of the shares and assets of AstraZeneca's sterile manufacturing site located in Monts, France.
From this location, Recip Pharma will continue to aseptically manufacture and fill into vials a "range" of AstraZeneca's anaesthetics products, and also terminally sterilise them "where appropriate."
"The agreement covers all the activities that were currently conducted on the site when it belonged to AstraZeneca, including manufacturing, packaging as well as other distribution-related activities. The arrangement will be in place for the foreseeable future," Thomas Eldered, executive vice president of Recip Pharma, told Outsourcing-Pharma.com.
According to AstraZeneca spokesperson Joan Pitt, the decision was taken to shed the French site because the "cost of production in the anaesthetics market was becoming prohibitive due to strong and increased generics competition."
"It is cheaper for us to sell the site to a contract manufacturer such as Recip Pharma and then outsource the manufacturing back to them," Pitt told Outsourcing-Pharma.com.
The decision to do so was made two years ago but it has taken two years for the firm to decide upon a suitable buyer, who would then also become a supplier; "a partner that we felt could maintain and build upon the success of the site," she said. "We have contracted with Recip Pharma to continue to supply current activities at the site for the next 3-5 years."
Pitt said that the company wanted to "exit the site via its sale because of our commitment to maintain staff and keep site open."
All the current AstraZeneca staff at the site will remain in employment and will now work for Recip Pharma. AstraZeneca staff will have the news confirmed to them today.
The move is part of a wider "productivity enhancing" and "cost containment" strategy being implemented by the company along with a plan to "right-size its asset base."
Not every AstraZeneca employee affected by this strategy has been as lucky as those at the French site who get to keep their jobs. The strategy, detailed in the firm's fourth quarter and year-end results publication in January, included the cull of 3,000 positions.
AstraZeneca stated in this publication that its "number one priority remains strengthening the pipeline by enhancing the productivity of its internal discovery and development and the continued pursuit of external opportunities."
As reported in Outsourcing-Pharma.com in February, the decision was and was predicted to pave the way for the formation of a number of future new outsourcing relationships between AstraZeneca and third parties.
Indeed it has, and more and more deals of this kind with Recip Pharma can reasonably be expected, although such an approach is not new for AstraZeneca.
"Review of our manufacturing and supply assets is an ongoing part of our business, recognising the importance of ensuring we are set up (whether it is through physical structures, outsourcing, people, etc.) to deliver in the current business environment," said Pitt.
AstraZeneca and Recip Pharma have had business dealings together of this nature in the past, with AstraZeneca having sold the firm two of its sites in Sweden in 2002 and 2004, where similar "contracting back" arrangements have ensued.
Recip Pharma has five main manufacturing facilities located in Sweden producing solid
dose, semi solids, penecillins and fibre-based products on a contract basis. It also conducts formulation development and recently announced a move to larger premises to support the growth in this area of the business. The move into France, however, the firm's first manufacturing foray outside of Sweden, although it has also recently set up offices in the UK and US.
"We see France as strategically important for a number of reasons: it is actually one of the largest markets in Europe for pharmaceuticals; it consists of a good mix of small, medium and also big pharma companies; and we feel that to gain access to some of these small to medium companies in particular we need to have a local manufacturing presence which this gives to us," said the company.
Meanwhile, the acquired facility has additional capacity and "it is our certainly our intention to secure further contracts with other firms on the site and evaluate options to expand the capabilities," said Eldered.
"This is a model we have successfully adopted in our previous acquisitions."
The firm said it chose this particular site for a number of reasons.
"We are focussed on becoming one of Europe's leading pharmaceutical contract services providers and to do this we recognised that we should be able to offer aseptic filling. This is something we did not previously have. This facility therefore provides us with new capabilities in a key area of Europe," said Eldered.
"It also has the added benefit of enjoying good investment levels in recent times and the staff are of a high calibre and extremely competent."