By Ludwig Burger
(Reuters) -Sandoz, the generic drugs business that will be spun off its parent Novartis, will boost investment in its European antibiotics production network by 50 million euros ($50 million) on strong global demand for bacteria-fighting medicines.
The construction of a penicillin production site in Kundl, Austria, takes the company’s total European investment budget for antibiotics to more than 250 million euros, Sandoz said in a statement on Monday.
It had previously announced plans to invest more than 150 million euros in Kundl, including about 50 million in Austrian state support, as well as 50 million euros to make injectable antibiotics in Palafolls, Spain.
The renewed commitment to antibiotics comes even after the generic drugmakers’ association in Europe last month warned that production of some medicines may have to be stopped because health systems are not raising reimbursement prices even as costs surge.
“We are seeing rapidly increasing demand following the unprecedented market swings of the past few years,” said Sandoz Chief Executive Richard Saynor, adding that a new production technology would allow the company to cut energy costs.
Antibiotics, made through fermentation of sugars, are a particularly energy-intensive class of drugs.
Speaking at a groundbreaking event in Kundl, Saynor reiterated the industry’s call on European health systems to allow for price mark-ups when energy costs soar, “to ensure the long-term sustainability of European-based antibiotic manufacturing and supply”.
“While industry as a whole has to be able to deal with some short-term energy price hikes, the sheer scale of the current increase directly threatens the viability of generic drug supply across a number of product groups in Europe,” said Saynor.
The chief executive of parent Novartis, Vas Narasimhan, last month said Sandoz would continue to provide medicines in European markets because a surge in energy costs can be offset by efficiency measures, adding that some smaller peers may struggle.
(Reporting by Ludwig Burger, Editing by Miranda Murray and Bernadette Baum)
