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Jul 25, 2013

Biosimilar Marriage Ends in Divorce for Teva, Lonza

  • Teva Pharmaceutical Industries and Lonza Group said today they would end their four-year-old joint venture to develop, manufacture, and market biosimilar drugs, four months after Lonza disclosed it was reviewing whether to continue the effort.

    “Both companies will continue to explore opportunities to maximize the value of the investments and progress that the joint venture has made to this point,” Teva said in a statement.

    The companies hoped to bring numerous biosimilars to market and “secure a leading position in the emerging biosimilars market,” they said in launching the joint venture in 2009. Teva and Lonza never announced financial terms but did say they wanted to build on Teva’s expertise in clinical development and marketing of generic pharmaceuticals, as well as Lonza’s global manufacturing capabilities.

    But Teva and Lonza were hampered by the slow category-by-category development of standards in Europe, and the even slower review of a biosimilar approval framework in the U.S., where FDA has yet to approve any such drugs while it continues to review four draft guidances on the topic. In October, Teva and Lonza abruptly ended development of a biosimilar for Rituxan.

    Lonza CEO Richard Ridinger, who has led a review of Lonza operations since taking office last year, said in a separate statement the end of the joint venture would save his company about CHF 150 million ($160.5 million).

    The companies also said they will pursue separate paths going forward. In the statement, Michael Hayden, M.D., Ph.D., Teva’s CSO and president, global R&D, said the end of the joint venture “supports our ability to maintain a highly selective approach in our efforts to create a balanced portfolio of biosimilars, biobetters, and innovative biologics that align with our overall portfolio and areas of disease focus, and by doing so better support our patients in these areas.”

    Stephan Kutzer, Ph.D., COO of Lonza Pharma & Biotech Market Segment, said his company will end efforts toward clinical developments and end product commercialization, and focus instead on what he called the company’s core expertise in contract manufacturing and cell-line development: “In our assessment those investments in biosimilars will require more capital than initially planned and will also take more time until they reach the market.”

    The end of the joint venture was one of two cutbacks announced by Lonza today. The company also said it would phase out its Hopkinton, MA, plant, in order to concentrate and consolidate its Microbial Biologics operations in Visp, Switzerland, taking a CHF 69 million ($73.8 million) impairment charge as a result. The Hopkinton closing is part of a manufacturing restructuring that shut down a plant earlier this year in Swords, Ireland, and will shut down another plant in St. Beauzire, France, by year’s end. The restructuring will result in the planned elimination of 250 jobs by the end of this year, as well as CHF 100 million ($107 million) in savings in 2016 when fully implemented.

    The cutbacks were announced as Lonza disclosed an 11% drop in net income for the first half of 2013 compared with a year ago, to CHF 41 million (about $43.9 million) on sales that slumped 11% year-over-year, to CHF 1.744 billion ($1.866 billion). 


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