For its first half 2015, the Switzerland-headquartered drugmaker reported pharmaceutical sales of 18.4bn CHF ($19.2bn), up 5% year-on-year.
Cash flow, however, was reduced by 1.3bn CHF, half of which was driven expansion of its manufacturing network, CFO Alan Hippe said on a call yesterday, while Roche’s COO of Pharmaceuticals, Daniel O’Day, added the firm would continue investing in in-house production.
“We are looking at expanding our manufacturing capacities by more than 40%,” he told stakeholders, due to the “demand for our biologic products that are currently launched, and also those coming to market.”
These include the monoclonal antibody products ocrelizumab for multiple sclerosis, lebrikizumab for severe uncontrolled asthma, and lampalizumab for advanced form of age-related macular degeneration.
While not giving long-term guidance on Roche’s investments, O’Day said there are “new plants and new facilities that will be coming online in 2016-2017” – such as Genentech’s cell culture plant in Vacaville, California which has is said to become the largest biotech facility in the world - to prepare for the extra capacity needs which will have an effect on costs over the next few quarters.
“We have investments in both drug substance and in drug product and drug product,” he continued. “We have a need for both right now both in terms of our current portfolio in terms of what we're able to deliver to the market and what's there for the future with the new portfolio.
“Certainly Vacaville is one key component of our manufacturing increase, but it's not only Vacaville, we have increases at other sites like Oceanside [California] and Penzberg [Germany] to enhance our drug product manufacturing as well.”
The firm reported a 16% increase in its manufacturing cost of goods sold to 2.3bn CHF for the half, much of which was attributed to the cost of outsourcing .
“I would certainly not imply that contract manufacturers are the sole reason or the major reason for the increase here, O’Day said, but it’s “very strategically important to have these contract manufacturers to allow us to have flexibility in our system moving forward based upon demand curves as we go into the future.
He continued: “So we continue to have about 80% of our biological manufacturing internally about 20% externally - we think that's a good mix for our high value manufacturing segment.”