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Service Sectors > Drug delivery, formulation

Alkermes - EDT merger to spark consolidation & strategic shift

By Nick Taylor , 19-Jul-2011

EDT will accelerate its shift to proprietary products and consolidate to save $20m when its takeover by Alkermes closes.

In May Alkermes agreed to buy Elan Drug Technologies (EDT) for $960m (€677m). Integration is now being discussed, with site consolidation at King of Prussia, Pennsylvania part of the plans.

By using clinical development ability, chemistry, manufacturing and control (CMC), and early formulation at Alkermes, EDT can cut expenditure, Shane Cooke, head of EDT, told an analyst and investor day. Associated site consolidation is predicted to contribute to savings of $20m.

EDT expects to need Alkermes’ clinical development expertise more-and-more as it shifts away from licensing and towards proprietary products. This shift was underway before the proposed deal but would accelerate under Alkermes as EDT profits would no longer serve Elan’s debt.

The strategy will see EDT apply its proprietary technologies, such as solubilisation processes, to improve existing molecules. Partnering or licensing these products will generate royalty and manufacturing revenues for EDT, said Cooke.

Alkermes’ acquisition of EDT is yet to close but is moving forward. Richard Pops, CEO of Alkermes, said progress has been made with the US Securities and Exchange Commission and the deal is on track for investor approval later in the year.

Big pharma win for CMO

To make better use of its production plants, in Ireland and Georgia, US, EDT is pursuing contract manufacturing deals. Clients include Eli Lilly, Pfizer, and Novartis, said Cooke, and in recent weeks EDT won a contract worth up to $20m a year to produce an existing product.

Signing up contract manufacturing clients should allow EDT to make better use of its production plants. Cooke said volumes at the plants could be increased up to fourfold while maintaining the current cost base.

EDT produces solid oral dose at its production plants and, as such, consolidation with Alkermes’ injectables manufacturing assets is not an option, Cooke said in response to an analyst’s question.

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