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Even though I am not on Herceptin due to being "weakly Her2", I thought this was an interesting article. Would they be doing this without a "bug in their ear" from the FDA...HMMMM. Also, based on the rules of "supply and demand", the price SHOULD be going down soon as well.
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UPDATE 3-Genentech boosting manufacturing to full capacity
Fri Jun 24, 2005 12:44 PM ET
(Updates with analyst comment)
NEW YORK, June 24 (Reuters) - Genentech Inc. (DNA.N: Quote, Profile, Research) , scrambling to meet demand for its popular cancer drugs, on Friday announced plans to boost production capacity to nearly 100 percent to prevent a shortage.
Demand is expected to remain strong for Avastin, Genentech's colon cancer drug that is now also showing promise for treating lung and breast cancer. Some investors had feared Genentech would be unable to meet demand.
"The good thing is they say they'll make it rather than miss it, but in future their execution needs to be extraordinary," Eric Schmidt, an analyst at SG Cowen, said. Schmidt predicts Avastin sales will reach $4.5 billion by 2009.
Shares of Genentech, the world's second-biggest biotechnology company, rose 1 percent to $80.79 after the news.
Genentech recently bought a facility from Biogen Idec (BIIB.O: Quote, Profile, Research) . It said it has now agreed to pay $30 million to Amgen Inc. (AMGN.O: Quote, Profile, Research) to get out of an agreement to manufacture some of Amgen's arthritis drug Enbrel so that it can use the plant for its own drugs. Genentech is also expanding other plants.
"I do not like to run at 100 percent capacity for an extended period of time," said Patrick Yang, senior vice president of product operations on a conference call with analysts. "We have a plan to do it, but it comes with some risk."
Genentech, which is majority owned by Roche Holding AG (ROG.VX: Quote, Profile, Research) , said its expansion plans mean its cost of sales will be higher than expected this year. On Thursday Genentech completed its acquisition of Biogen's manufacturing facility in Oceanside, California, for $408 million. Closing costs were $9 million, and Genentech said it expects to incur additional capital costs at the facility over the next 24 months, including upgrades and start-up costs.
Genentech expects capital expenditures in 2005 to be about $1.7 billion, and it expects $15 million in operating expenses associated with the Oceanside facility in the second half of 2005.
The company also agreed to resolve an open issue with a manufacturing collaborator for $11 million. These costs will be part of the cost of sales for the second quarter.
Genentech shares were up $1.07 at $80.79 on the New York Stock Exchange.
© Reuters 2005. All Rights Reserved.
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