This Can Be Patheon's Fate in Trump's Call for Increased Drug Production

February 3, 2017
By Alex Keown, BioSpace.com Breaking News Staff

DURHAM, N.C. – If more pharma companies bring manufacturing back to the United States, North Carolina-based contract manufacturing organization Patheon Inc. could be well-suited to reap the benefits, according to an analyst report. In a note issued earlier this week, Eric Coldwell of Baird Equity Research, said Patheon has “meaningful excess domestic capacity” to handle additional manufacturing duties, Outsourcing Pharma reported this morning. If there is a manufacturing boom, Coldwell said Patheon’s excess capabilities could cause company revenue to double—all without having to invest in additional manufacturing space.

Patheon, a provider of commercial manufacturing outsourcing services and outsourced pharmaceutical development services, operates 20 commercial-scale production facilities around the world, employing roughly 8,000 people. The company posted about $1.8 billion in revenue last year. Patheon operates three North Carolina sites and several in South Carolina.

Last year, Patheon acquired a 300,000 square-foot facility formerly owned by Roche in Florence, S.C. The company said the new site provides manufacturing capacity for active pharmaceutical ingredients (API) ranging from development to manufacturing services. The new site will allow Patheon to expand its capacity for manufacturing highly potent compounds, and adds capabilities to support solid-state chemistry, micronization and eventually, commercial spray drying, the company said in November, when it entered the deal with Roche. This month, Patheon completed the deal that included reactors ranging from 50-11,000 liters producing multiple products simultaneously.

While Patheon enjoys plenty of manufacturing space in the United States, Coldwell also noted that the company has several other positives that could help it increase revenue. While many drug components are manufactured overseas, which leads to a complex supply chain, Coldwell said that many of the drug components used by Patheon, including vials, stoppers, syringes and capsules, are sourced locally and not imported. That, Outsourcing Pharma noted, would allow the company to avoid any tariffs that President Trump might impose on foreign-made drugs and products coming into the United States.

Trump, before and after his inauguration, has called for drug manufacturing to return to the United States. “We have to get our drug industry coming back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs but they don’t make them here, to a large extent,” Trump said in a press conference prior to his being sworn in.

Following a meeting between the president and leaders of the pharmaceutical industry, Stephen J. Ubl, chief executive officer of the Pharmaceutical Research and Manufacturers of America (PhRMA), took to Twitter touting Trump’s tax plans and how that policy could positively impact the industry. Ubl said Trump’s agenda for taxes, trade and regulations could create 350,000 American jobs in the biopharma industry over the next 10 years.