Novartis adds €50 million to EU antibiotics investment budget

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  • Project takes EU investment budget for antibiotics to €250m
  • Sandoz says global demand for antibiotics is growing rapidly
  • Sandoz continues to call for generic drug pricing reform

Nov 7 (Reuters) – Sandoz, the generic drugs company that will be spun off from parent company Novartis (NOVN.S)will increase investment in its European antibiotic production network by €50 million ($50 million) due to strong global demand for antibacterial drugs.

The construction of a penicillin production site in Kundl, Austria, brings the company’s total European investment budget for antibiotics to more than 250 million euros, Sandoz said in a statement on Monday.

He had previously announced his intention to invest more than 150 million euros in Kundl, including around 50 million in Austrian state support, as well as 50 million euros to manufacture injectable antibiotics in Palafolls, Spain.

The renewed commitment to antibiotics comes even after the association of generic drug makers in Europe warned last month that production of some drugs may have to be stopped because health systems fail to raise reimbursement prices while even as costs increase.

“We are seeing a rapid increase in demand following unprecedented market fluctuations in recent years,” said Sandoz chief executive Richard Saynor, adding that new production technology would help the company reduce energy costs. .

Antibiotics, made by fermenting sugars, are a particularly energy-intensive class of drugs.

Speaking at a groundbreaking event in Kundl, Saynor reiterated the industry’s call for European healthcare systems to allow price mark-ups when energy costs soar, “in order to ‘ensure the long-term sustainability of European-based antibiotic manufacturing and supply’.

“While the industry as a whole needs to be able to weather some energy price increases in the short term, the sheer magnitude of the current increase directly threatens the viability of generic drug supply in a number of product groups in Europe,” said Saynor.

CEO of parent company Novartis Vas Narasimhan said last month that Sandoz would continue to supply drugs to European markets as a spike in energy costs can be offset by efficiency measures, adding that some smaller peers might have difficulty.

Reporting by Ludwig Burger, Editing by Miranda Murray and Bernadette Baum

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