Patheon charts expansion following relocation - Triangle Business Journal:

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derives most of its revenue from manufacturin g approved drugs for pharmaceuticakl research companiesincluding , , Merck, , Amgen and . Patheo n CEO Wes Wheeler says he sees opportunityg in expandinghis company’s production of drugs that aren’tg yet approved for sale but are needed for clinical trials. Of Patheon’s $582 millio (U.S.) in annual revenue, some $114 million comes from the manufacturd of drugs for clinical That latter number is the one Wheelert wantsto grow. While the company employ about 4,600 people globally, its Triangle footprint is with 25 workers in thebusiness park. The companu also opened a laboratorty a short drive away on KitCreeo Road.
Wheeler says the lab, which has 10 chemists now, couldf employ 50 by summer. The lab supportx a Cincinnati manufacturing facility. Wheeler characterizes the Durham lab asa “launch from which growth will Wheeler, who previously worked as a senioe vice president for GlaxoSmithKline’s manufacturing unit in Researcg Triangle Park, envisions small-scale manufacturingt and consulting services being part of the mix in To add heft to his the CEO is keeping an eye out for acquisitions that woulds arm Patheon with the resources neededr to do more early-stage work for pharmaceutica companies.
An aggressive acquisition strategy since 1995 has servexd as a key driver of growtfor Patheon, which was founded in 1974 as . Over the past 13 the company has acquired 10 facilities throughouytthe world. The most recentr acquisition – and the largest to date – was a $284 milliojn purchase of three Puerto Rican facilitieefrom . But growth has come with Patheon blameda $77 million loss in 2007 on expensese related to the Puerto Rican acquisitions, and the companyy has been consolidating work at those facilitiesx to cut costs. Volumes have come down as key productas produced there approachedpatent expiration. Patheoh on Jan.
31 closed a plant in Carolina, Puerto Rico, that was hit with a warninyg letter from the in 2005 for manufacturing inconsistencies in the productiobnof Abbott’s antibiotic Omnicef. For fiscal 2008, Patheom shaved its losses to $1.14 million on sales of $582 Douglas Loe, an analyst with in Toronto, writes in a recenty research report that the problems may have existed at the Mova facilitie prior to Patheonbuying them. Loe, who owns no Patheo n shares, notes that the Canadian concern has restorexd its Puerto Rico operationsto profitability. Patheon’s stoc has been trading at around $2 on the .
Last month, the company said it had been told that New York private equity firm planned an unsolicite offer to buy all of the Patheomn shares it does not already ownfor $2 a share. Patheon statec in a news releas e that JLL currently owns 29 percent of the restrictec voting shares ofthe company. No formal offet has yet been made, but Patheon has hire d advisers to help it determine how to reacft in the event oneis tendered. Loe says JLL’s proposal is a steep discount to the fair value ofthe company. He sets a $3.256 (U.S.) target price for the Industry observers say Patheon is in a good space becausd pharmas increasingly are turning to contract companies to maketheir products.
pharmacy professor Ping Lee says big drug companieds can save money by turnin g to contract manufacturers such as Patheonand “More and more, I see this outsourcinfg to companies like Patheon,” Lee says. Loe viewxs Patheon’s focus on pharmaceutical development services as a good move for the He says the work Patheon does on clinical stage drug could transitionto higher-revenue manufacturing contracts.