CEO Wolfgang Wienand said the acquisition, expected to close at the end of 2020, subject to customary closing conditions, “is perfectly in line with our corporate strategy EVOLVE and represents another major step towards our vision to create one of the most competitive integrated global networks in the CDMO industry.”

Both of the sites to be added are located in Barcelona province and employ altogether 1,000 people specialized in the manufacture of ophthalmic steriles (El Masnou) as well as oral solid dosage (OSD) forms and capsules used in inhalation devices (Barberà del Vallès).

The El Masnou site is regarded as a leading player in its markets. Siegfried said this business is complementary to its existing capacity and capabilities for ophthalmology products and sterile filling at its sites in Irvine, California, USA, and Hameln, Germany. 

Taking over the Barberà del Vallès facilities, the CDMO said, will “significantly strengthen” its existing OSD capabilities in Malta by adding large-scale capacity and capabilities to manufacture highly potent drug products as well as enhancing the portfolio with attractive inhalation

Starting in 2021, Siegfried intends to transform the two currently sites that are currently captive suppliers of Novartis into competitive customer-facing CDMO platforms offering their services to various clients worldwide. “This transformation,” it said, “will include an operational efficiency review as well an investment in development capacity and capabilities to create a center of excellence for the sites’ current technology portfolio in the Barcelona region.

With the change, the group said it will be able to offer existing and new customers an even broader range of development services and enhanced production capacity to take on new business.

As part of the transaction, Novartis and Siegfried have agreed to cooperate closely during the carve-out and post-merger integration process and make multi-year purchase commitments for the manufacturing and supply of important Novartis products, with Siegfried being awarded preferred supplier status.

 Under a manufacturing and supply agreement, Novartis will procure sizable volumes of products from both of the sites newly owned by Siegried. Based on the available capacity and capabilities, the CDMO said it will be able to service both Novartis and new clients as part of a broad portfolio of customers and products.

From 2021, Siegfried expects annual sales to exceed 1 billion Swiss francs. It plans to finance the acquisition through its existing credit facilities. Post-closing,  management said it intends to issue hybrid convertible bonds for refinancing. An equity increase is not on the agenda.

Author: Dede Williams, Freelance Journalist