Roche buys Singapore facility from Lonza

Global healthcare firm Roche will buy a Singapore biologic manufacturing facility for up to $360 million from chemical and biotechnology firm Lonza , the two firms said yesterday.

Basel-based Roche will buy the facility through its San Francisco-headquartered subsidiary Genentech, which it acquired earlier this year. The acquisition price of $360 million has two components: a $290 million upfront payment and a $70 million milestone-based payment.

After the takeover, the Lonza facility will be merged with Genentech Singapore's existing facility. The Lonza facility is designed to produce the bulk drug substance for Avastin, a breakthrough chemotherapy drug used to treat colon, rectal and lung cancer, which the US Food and Drug Administration approved for commercial use in 2004.

Genentech Singapore's existing facility is expected to receive FDA approval in 2010 to produce Lucentis injections, a prescription medicine for the treatment of patients with eye degeneration. Roche said the "combined Singapore operations will play a key role in Roche's global manufacturing network".

Around 230 employees associated with the Lonza facility will join Genentech, taking the total headcount at Genentech Singapore to 325.

Roche, a pharmaceutical and diagnostics firm with a turnover in fiscal 2008 of SFr46 billion ($43 billion), first offered to buy out Genentech, a biotechnology company, in August 2008. Roche and Genentech reached an agreement on pricing in March 2009 and the deal, which saw Roche delist Genentech from the New York Stock Exchange, was closed shortly thereafter. Roche and Genentech are still integrating their businesses and the Genentech Singapore biotechnology facility will be renamed Roche Singapore Technical Operations later this year.

Lonza, which is also based in Basel, supplies active pharmaceutical ingredients (APIs) to the pharmaceuticals industry. Lonza agreed to build the Singapore facility in 2006, under an agreement with Genentech, which negotiated an option to buy it sometime between 2007 and 2012 for up to $360 million. Lonza has been constructing the Avastin facility alongside the construction of its own process development facility and cell therapy unit in Singapore, which is expected to go on stream in 2011.

Singapore is trying to position itself as a biotechnology centre on the back of operating costs that are significantly lower than in the western world; strong patent protection; and an enabling regulatory framework. For example, Singapore allows stem cell research, which has led to stem cell research company ES Life and cord blood company Cordlife both setting up headquarters in the city-state.

Singapore has also created, under the Economic Development Board (EDB), an investment arm called Bio-One Capital. Bio-One finances biotechnology projects in Singapore with the intent of establishing the country as a major centre for the biotechnology industry. It currently manages around $790 million and is in the process of investing its fourth fund.