Sandoz has struck a deal with the Austrian government to invest more than $175 million in its site in Kundl, Austria, Europe’s last large-scale antibiotics plant.
Under the plan, which requires formal approval, the government will put up about one-third of the money. In exchange, Sandoz says it will commit to keeping production of penicillin active pharmaceutical ingredients (APIs) going in Europe for the next 10 years, “despite fierce global price competition, particularly from China.”
“Antibiotics are the backbone of modern medicine and our Kundl facility in Austria is the hub and center of the last remaining integrated production chain for antibiotics in the western world,” Sandoz CEO Richard Saynor says in a statement. “This joint investment will help to keep it that way.”
Europe was once a major antibiotics manufacturing center, but competition from Chinese and Indian firms has whittled away at the region’s production base. Over the years, players like Italy’s Antibioticos and the Dutch firm DSM exited or significantly cut back their businesses. Sandoz itself sold an antibiotics facility in Germany in 2016 to the API maker Corden BioChem. Soon after, in the face of Chinese competition, Corden ended production of 7-aminocephalosporanic acid, used to make cephalosporin-class antibiotics.
The Kundl site focuses on penicillin products, including penicillin V and G, the intermediate 6-aminopenicillanic acid, and semisynthetic derivatives such as amoxicillin and ampicillin. The plant also produces finished-dose penicillins and cephalosporins. Sandoz says it will invest the money over 5 years to strengthen the facility’s competitiveness and introduce new manufacturing technology.
Sandoz’s investment is one of several ongoing in the US and Europe to shore up local drug manufacturing. In Europe, the drugmaker Sanofi is spinning off much of its API business into a new company. In announcing the plan in February, the firm said the move will “help in balancing the industry’s heavy reliance on API sourced from the Asian region.”
In the US, the Trump administration granted a new company, Phlow, $354 million in funding in May to produce generic drugs at risk of shortage. And last week, a US agency said it will make a $765 million loan to Eastman Kodak to launch an API manufacturing business (see page 10).