Building a Turnkey Manufacturing Solution - Lonza's bid for Patheon makes the contract manufacturing industry re-examine the one-stop manufacturer model. - BioPharm International


Building a Turnkey Manufacturing Solution
Lonza's bid for Patheon makes the contract manufacturing industry re-examine the one-stop manufacturer model.

BioPharm International
Volume 22, Issue 10


We think that Lonza brings some attributes to a combination with Patheon that might obviate these negatives. One of its biggest assets is the scope of its capabilities. With offerings in both small-and large-molecule API process development and manufacturing, including microbial fermentation, mammalian cell culture, peptides, high potency APIs, and antibody conjugates, it is positioned to service most of the candidates in even the largest new product portfolio. Combined with its financial soundness and a reputation for operational reliability, it is well positioned to be selected as a preferred provider by global bio/pharma companies seeking to consolidate their sourcing activities into a small number of vendors. By acquiring Patheon, Lonza has the opportunity to enhance its preferred provider status by adding dose manufacturing while extending its preferred provider "halo" to Patheon's dose manufacturing offerings.

A second major asset that Lonza brings to the Patheon acquisition is its ability to put together long-term strategic deals with major bio/pharmaceutical companies. Lonza has announced long-term strategic relationships for its biomanufacturing services with Genentech and Novartis, and claims to be negotiating more such deals. Those announced transactions are notable for their innovation and comprehensiveness, combining its manufacturing expertise with elements of financial engineering and risk management. It is likely that Lonza executives expect that they can use their preferred partner status and deal-making skills to negotiate major comprehensive supply agreements that Patheon cannot do on its own, incorporating API and dose manufacturing capabilities, and filling Patheon's dose manufacturing capacity.


Of course, these advantages are meaningless if Lonza cannot convince JLL Partners to sell its shares. JLL has publicly rejected Lonza's offer and stated its intention to maintain its stake in Patheon and help Patheon's management grow the company. Lonza for its part has said it would not raise its price. We can assume that these are both negotiating positions and that the companies will explore ways of meeting their objectives.

By the time this column gets published the situation may have been settled, but even if Lonza is unsuccessful in acquiring Patheon, a precedent has been set. Lonza has announced its determination to add dose formulation and manufacturing to its API development and manufacturing capabilities. The move will no doubt prompt other API manufacturers to seriously consider the merits of the one-stop manufacturing model for their own positions. In fact, several API manufacturers, including DSM, PCAS, and Boehringer Ingelheim already have significant dose manufacturing capabilities.

We could be on the verge of a major consolidation of the contract manufacturing industry.

Jim Miller is president of PharmSource Information Services, Inc. , Springfield, VA, 703.383.4903,

blog comments powered by Disqus



FDA Extends Review of Novartis' Investigational Compound for Multiple Myeloma
November 25, 2014
Merck Enters into Licensing Agreement with NewLink for Investigational Ebola Vaccine
November 25, 2014
AstraZeneca Expands Biologics Manufacturing in Maryland
November 25, 2014
GSK Leads Big Pharma in Making Its Medicines Accessible
November 24, 2014
IMS: Global Spending on Medicines to Rise 30% by 2018
November 24, 2014
Author Guidelines
Source: BioPharm International,
Click here