Austria Invests in Novartis’ Antibiotics Plant

11.08.2020 - The Austrian government is sharing a third of the cost of a €150 million upgrade Novartis' generics unit Sandoz is stemming at its Kundl, Austria, facility. The Swiss drugmaker claims this is the last remaining integrated production chain for antibiotics in the Western world.

In view of the ongoing pandemic and possible disruptions in supply chains, Austria wants to make sure that essential antibiotics will be available in that country and other European nations. The money will go toward developing state-of-the-art manufacturing technology for active pharmaceutical ingredients (APIs), in particular for penicillin, along with finished drugs.

As part of the agreement, Sandoz is committing to produce APIs in Europe for the next 10 years, despite the fact that countries such as China can make them cheaper. Kundl, it said, can make enough penicillin products to potentially meet all current Europe-wide demand.

Many European and American drugmakers have stopped investing in new antibiotics, despite rising drug resistance, as China’s dominance has become so overwhelming. Novartis shut down antibacterial and antiviral research at its Novartis Institutes for Biomedical Research campus in California, USA, in 2018 and put its projects there up for sale.

In the meantime, the pandemic has driven home the danger of outsourcing most of the world’s API production to Asia. In July, a consortium of 20 “big pharma” companies, including  Novartis, established the new $1 billion AMR Action Fund with the intent of bringing  two to four new antibiotics to market by 2030.

In the US, the Trump administration is pushing the re-establishment of national API output in particular as the president was angered when India, another major API supplier, moved the freeze at the height of the pandemic.

China, however, is now regarded as the leading global supplier of antibiotics, accounting for around 90% of the US market’s supplies. Earlier this year, the US government signed a $354 million four-year contract with a scarcely know company called Phlow to manufacture ingredients and finished generic drugs for COVID-19, including certain antibiotics.

Putting national emergency supply in the hands of a company with no track record of turning out finished drug has raised the ire of the traditional US pharma industry, as well as the more recent government decision to tap photography group Eastman Kodak to produce APIs.