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Patheon eyes wins in wake of FDA warnings to Big Pharma

By Nick Taylor , 21-Jun-2012

The surge in FDA cGMP warning letters to major biopharma companies has created an opportunity for CMOs, the CEO of Patheon said.

Merck KGaA, GlaxoSmithKline, Sandoz, and others have faced regulatory actions over the past year and Patheon is trying to win business in the wake of disturbances caused by the warning letters.

The various warning letters going around Big Pharma [have created] some opportunities,” James Mullen, CEO of Patheon, said at the Wells Fargo Securities Healthcare Conference. Patheon is yet to generate revenue from these companies but sales will come in 12 to 18 months after signing deals.

A drug quality clampdown by the US Food and Drug Administration (FDA) has been blamed for the closure of some CMOs (contract manufacturing organisations) but it can create business for others.

As well as winning business away from in-house operations at pharma companies Patheon is trying to take clients from other CMOs. Quality problems have dogged Hospira and Ben Venue Laboratories over the past year and issues with the FDA have disrupted operations.

[Quality problems at] Ben Venue and Hospira have really created a lot of pressure in the parenteral outsourcing. We certainly have seen business come in from that,” Mullen said. Again, this is yet to translate into meaningful revenues because of the time it takes to transfer manufacturing.

Talk of new business wins comes after a positive quarter for Patheon. Restructuring actions led to the Canada-based CMO posting a $64.6m (€51m) operating loss but revenue growth prompted the firm to raise its full-year sales guidance.

The 18.9 per cent underlying business growth in the second quarter is very encouraging, as we are winning new business and growing existing customer relationships. Our transformation activities are on track,” Mullen said in a press statement accompanying the second quarter results.

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