More Cambrex capacity expansion: API firm to grow Karlskoga facility

By Gareth Macdonald

- Last updated on GMT


Related tags Pharmaceutical drug Active ingredient Capacity utilization

Cambrex will spend $9m (€8m) to add large-scale manufacturing capability at its API production facility in Karlskoga, Sweden.

The US active pharmaceutical ingredient (API) manufacturer announced the expansion this week, citing customer demand and a desire to improve efficiency. The plan is to add multi-purpose reactors to accommodate the production of various drug actives.

Cambrex also said it will upgrade the site’s control room. In June​ the firm installed an Answerthink laboratory information management system at the facility.

The reactors are expected to be operational before the end of the year. Bjarne Sandberg, managing director of the Karlskoga site, said: “By creating greater capacity within the current infrastructure, we have combined expansion and efficiency at the site​.”

A spokesman told us "The expansion at Cambrex’s Swedish site is part of our ongoing strategic campaign to invest in small molecule API manufacturing across our global network of facilities, in response to an increase in demand for larger scale, multi-purpose manufacturing capabilities."

He added that: "Financial investment is carefully considered prior to commissioning the expansion of any manufacturing plant. Factors include elements such as the value of the products manufactured, the customer base and the customers’ current and anticipated requirements, location, in addition to operating costs.

"We have seen an increased need for larger scale, multi-purpose manufacturing capabilities and we are confident that the expansion will be well utilised."

Capacity opportunities

The Karlskoga investment follows a number of capacity expansions​ at Cambrex’s US manufacturing site in Charles City, Iowa.

The rationale for all the expansion has been “get ahead of the capacity utilisation curve​” according to CFO Gregory Sargen. He told investors during Cambrex’s second quarter conference call in July that the previous reactive strategy had meant the firm “lost some opportunities.”

Cambrex's desire to make the most of opportunities comes as observers (here​ and here​) raise questions about its continuing reliance on Gilead Sciences. The firm makes the APIs for the blockbuster hepatitis C drugs Sovaldi and Harvoni for Gilead.

According to Cambrex’s financials results, Gilead contributed 34.5% of its 433m revenue in 2015. Harvoni sales fell 22% in the first six months of 2016.

Hepatitis C is an increasingly competitive field and Harvoni has suffered. In the second quarter the drug generated revenue of $2.56bn, which is down 29% on the year earlier quarter largely due to lower US sales.

Solvadi, Gilead’s successor to Harvoni, saw sales increase 5% to $1.36bn in the period.

Karlskoga operation

The Karlskoga facility makes APIs and intermediates for a variety of drugs. This includes Genzyme's Renagel (sevelamer hydrochloride) – a treatment for dialysis patients with elevated phosphate levels – which it began manufacturing in 2003​.

Cambrex had been making the Renagel intermediate at its US facility in Charles City, Iowa, but growth in sales meant that production capacity needed to be expanded.

At the time Cambrex also said Genzyme also wanted production to take place nearer its new bulk active pharmaceutical intermediate manufacturing facility in Haverhill, UK.

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