After AZ R&D exit, CMOs anxious to keep pharma in the country

By Fiona Barry

- Last updated on GMT

Indian CMO Kemwell has its Swedish headquarters in Uppsala Business Park, Sweden
Indian CMO Kemwell has its Swedish headquarters in Uppsala Business Park, Sweden

Related tags: Venture capital, Sweden, Astrazeneca

Pharma companies have called on the Swedish government to prevent manufacturing going the way of R&D and leaving the country, after AstraZeneca closed its research in Lund in 2012.

Sweden currently has a strong manufacturing backbone – Pfizer, AstraZeneca, Octopharma, Galderma, Kemwell, Abbott and Fresenius Kabi all have major Swedish production facilities – but CMO Kemwell expressed concern for the future.

Business Development Manager Leo Fallgran told us that the government had previously given strong support to the Swedish life sciences industry – especially during the heyday of Pharmacia​ – but “how much does the government do now? It relies on companies supporting themselves.​”

He and Kemwell Sweden’s new CEO, Mikael Ericson, said the government should do more to make pharma manufacturing more competitive globally, perhaps by following the UK’s example of lowering taxes for companies building production facilities.

Swedish and Scandinavian production could also be better promoted to the world, they said, suggesting the government listen to the biggest companies’ predictions for the next five to ten years, and heed their policy requests.

If they don’t it will be like AstraZeneca in Lund, they will move and then it’s too late. They have to react now​.” After closing research operations in Lund and Södertälje in the last decade, AstraZeneca has retained only its Molndal site, with a staff of 2000, for Sweden-based R&D.

Russia and Brazil: big contenders

Ericson said Swedish manufacturers are facing competition from larger markets beginning to set their own agendas.

Big pharma wants to expand into big areas like Russia and Brazil. In order to access those markets, those governments put demands on having manufacturing and R&D, otherwise they won’t open their markets.

Those countries have understood that if you can access and build that knowledge you’re also building growth for the country​.”

Kemwell's Leo Fallgran (left) and Mikael Ericson (right) at Kemwell's Uppsala facility.
Kemwell's Leo Fallgran (left) and Mikael Ericson (right) at Kemwell's Uppsala facility.

Venture capital solution?

The CMO suggested more SMEs would benefit all of Swedish life sciences.

If we could have more innovation in R&D from smaller companies, then when it comes to manufacturing [their products] then we could step in,” ​said Fallgren.

This model would need heavy investment from venture capital to take small companies beyond early phase, to avoid the acquisitions and outlicensing which take the products out of the country, he said.

The chief of Stockholm biotech X-Brane agreed on the need to keep young pharma companies in the country.

Backed by local venture fund Serendipity, X-Brane focuses on using E.coli for protein production.

The problem I’ve seen is more that there are a lot of exits within Swedish biotechs. That’s the sad part – I don’t see at the moment a new AstraZeneca or Pharmacia being built,​” said CEO Siavash Bashiri.

Even though the environment here is perfect for Halo Genomics to continue to develop, obviously Agilent decided to move it.​”

Similarly, in 2008 Amic was bought by J&J Nordic which moved it out of the country some weeks later.

The solution, he suggested, lies in finding venture capital firms “that prefer to build a company and make it big and global. Serendipity is not exit-driven. That makes them unusual among venture capitalists here.​”

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