India's Nicholas Piramal buys Pfizer's UK manufacturing plant

By Gregory Roumeliotis

- Last updated on GMT

Related tags Pfizer

Continuing its aggressive entry into Europe's custom manufacturing
arena, Nicholas Piramal (NPIL) has today acquired Pfizer's
manufacturing facility in Northumberland, in a deal that could earn
it more than $350m (€280m) by 2011.

The sale is NPIL's third acquisition in the UK following its takeover of Rhodia's inhalation anaesthetics business in December 2004 and the acquisition of Avecia's custom manufacturing business in December 2005.

NPIL claims it will emerge from this latest deal as one of the world's top-ten pharmaceuticals outsourcing companies across custom synthesis, active pharmaceutical ingredients (APIs) and finished dosage.

The Indian firm will now use the newly acquired facility in Morpeth to build on its sourcing relationship with Pfizer, which started in December 2005 when it secured a seven-year contract to provide process development and scale-up services to Pfizer's animal health division.

With the acquisition of Morpeth, NPIL will become the biggest supplier, in terms of spend, within Pfizer's global contract manufacturing network, with supplies to over 100 global markets.

The deal involves a supply agreement which runs till November 2011, totalling potential revenues above $350m, as NPIL will make several drugs for Pfizer it used to make in the plant, including patented and off-patent finished dosage and APIs.

"The Morpeth site offers new technologies for us, more product offerings, enhanced quality systems and boosts our relationship with Pfizer,"​ NPIL's chairman Ajay Piramal told​.

"We plan to use our European assets to manufacture niche high-value drugs such as cytotoxic products, while keeping lower cost manufacturing in India."

Indeed, many Indian pharmaceutical firms are following this strategy, with Ranbaxy buying three companies in Europe this year, including GSK's generic business in Italy and Romania's Terapia, while Dr Reddy's acquired German drugmaker Betapharm.

NPL, which now expects to have annual custom manufacturing revenues of $200m, will take over the Morpeth site by 19 June, subject to regulatory approvals.

As Morpeth is a supply hub for many Pfizer products supplied to the US, Europe and Japan, it is approved by the US Food and Drug Administration (FDA) and the UK's Medicines and Healthcare products Regulatory Agency (MHRA).

Morpeth's team of about 450 people, which will be fully transferred to NPIL, has ample experience in new product launch, site technical transfer and operational excellence initiatives such as JIT & Right-First-Time.

"The facility makes cardiovascular, female health and arthritis drugs, with the manufacturing and packaging of both tablets and capsules,"​ Pifzer spokeswoman Vicki Trinder told​.

"The reason the plant was sold is excess capacity, as we streamline operations and look for efficiencies."

After its merger with Warner Lambert in 2000, Pfizer acquired Pharmacia for $60bn in 2003, becoming the largest drug manufacturer in the world, and since then it has been trying to consolidate its manufacturing operations.

The US drugmaker said it will continue to look at its manufacturing plants, move products around and adjust capacity in its quest for savings.

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