Irvine-based Sicor Inc. has finished building a new plant in Mexico and launched an outside review of the site as the next step in its bid to enter the market for generic biotechnology drugs.
“The walls are up. We’re going through validation,” said Laurie Little, a Sicor spokeswoman.
The new plant is in Toluca, Mexico, roughly an hour north of Mexico City. The facility, near an existing Sicor plant that makes steroids, is set to start producing drugs in the second half of next year, Little said.
Sicor, which makes generic versions of injectable cancer and anesthesiology drugs as well as pharmaceutical compounds, has brought in a consultant to verify that the plant’s systems and equipment meet guidelines of the U.S. Food and Drug Administration.
The process, known as validation, requires test runs of pharmaceuticals and lasts 12 to 18 months, according to Little.
Sicor’s new plant is designed to meet FDA specifications, but Little said the company doesn’t plan to seek U.S. approval of the site off the bat. Instead, Sicor’s marketing plan calls for introducing generic biotech drugs in developing markets such as Latin America, the Middle East and Eastern Europe. The company then plans to enter Western Europe and finally the U.S.
The plant is set to be a filling and finishing operation for injectable pharmaceuticals. Under the setup, Sicor plans to receive biotech compounds from other producers of proteins. Drug types are expected to include interferon and human growth hormone.
As for employment, Little estimated that around 100 people would work at the new plant in the initial stages. Sicor employs between 500 and 600 people at its current Toluca operation.
Sicor and Teva Pharmaceutical Industries Ltd. of Israel are considered to be among a few companies capable of entering the generic biotech market when it becomes a larger force. Most analysts don’t believe that generic biotechnology drugs will become a factor in the U.S. until around 2007, when the first patents expire.
Robert Uhl, an analyst with Boston’s Leerink Swann & Co., calls Sicor’s bid to go after developing markets first “the right strategy.”
“With all the regulations in Western Europe and the U.S., (developing markets are) receptive to discount-priced product,” he said.
Mexico is part of planning “well in advance” for pending generic biotech, said John Sayward, Sicor’s chief financial officer, who spoke at a recent First Union Capital Markets conference. Sayward said that introducing generic biotech drugs in developing countries mitigates the potential risk of the U.S. market developing later.
“Our strategy is not just to sit and wait,” Little said.
Generic biotechnology is “a $2 billion to $3 billion market for the branded side,” according to analyst Uhl. “If they (Sicor) get as little as 10% of that, it will double their sales. It’s a gigantic opportunity,” he said.
Sicor said last week that it expects earnings for the second quarter and the full year to exceed the high end of estimates.
In a release, Sicor said it stands “to benefit from increased product sales and improved product margins of products approved and marketed during the past two years.”
The company’s stock is a standout on Wall Street, having more than doubled since late April. As of last week, Sicor shares were trading above 20, giving the company a market value of more than $2 billion.
Sicor’s also been busy on the legal front, prevailing earlier this year in a federal patent infringement case brought against it by Bristol-Myers Squibb Co. In late March, a U.S. appeals court upheld a lower court finding that a Bristol-Myers patent covering cisplatin, a chemotherapy drug made by Sicor, was invalid. n
