Novartis Unveils €150M Antibiotics Investment For Europe

Novartis (NVS) generics and biosimilars division, Sandoz, has announced a joint investment with the Austrian federal government to ‘strengthen the future of integrated antibiotics manufacturing in Europe’.

Sandoz intends to invest more than EUR 150 million over the next five years to boost the competitiveness of its integrated antibiotic manufacturing operations at Kundl, creating innovative manufacturing technology for both active pharmaceutical ingredients (APIs) and finished dosage forms (FDFs).

According to Sandoz CEO Richard Saynor: “Antibiotics are the backbone of modern medicine and our Kundl facility in Austria is the hub and center of the last remaining integrated production chain for antibiotics in the western world. This joint investment will help to keep it that way.”

Under the plan, which is still subject to formal approvals, the Austrian federal government would contribute or coordinate public funding of EUR 50 million towards the total investment, as part of its efforts to increase European-based production of essential medicines. Sandoz and the Austrian government hope to close the agreement before year-end.

The government funding would primarily support new process technology to produce API for penicillin products at Kundl. Sandoz would commit to related penicillin API production in Europe for the next 10 years, despite fierce global price competition, particularly from China.

Indeed, Sandoz currently produces enough penicillin products at Kundl to potentially meet all Europe-wide demand. Kundl is the Sandoz competence center for antibiotic FDFs and the focal point of its European antibiotics manufacturing network, the company says.

Shares in Novartis are down 11% year-to-date, but Citigroup’s Andrew Baum retains a bullish view on the stock with a $112 price target (33% upside potential). (See Novartis stock analysis on TipRanks).

He cited the stock’s recent under-performance as a driving factor in his recent upgrade, alongside a backlog of product launches in China and a cardiovascular franchise poised to expand post-Covid-19.

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