News

Posted On: 09/05/2007

J&J Taps Draxis Pharma for Contract Manufacturing

PharmaManufacturing.com

Draxis Pharma, the contract manufacturing division of Mississauga, Ont.-based Draxis Health Inc., announced Sept. 5 that it has expanded its existing contract manufacturing relationship with Johnson & Johnson Consumer Companies, Inc. Draxis Pharma (Montreal, Quebec) has entered into a definitive supply agreement to provide commercial manufacturing services for a broad portfolio of multiple non-sterile specialty semi-solid products currently marketed in the United States.

The new multi-year contract runs to the end of 2013. It includes approximately two years of manufacturing site transfer and process validation activities followed by five years of commercial production, which is scheduled to begin in 2009. Commercial production is expected to generate incremental revenues in excess of US$120 million over the five year period of 2009 through 2013. The transfer of equipment and production technologies, which is in progress, is expected to generate additional cumulative revenues during 2007 and 2008 of approximately US$6 to US$8 million. The contract also contemplates optional extensions beyond 2013.

“This contract includes prescription and non-prescription products and will significantly improve capacity utilization in the semi-solids section of our non-sterile operations," said Dr. Martin Barkin, president and CEO of Draxis Health. "The confidence shown in Draxis demonstrates our ability to deliver top quality, market-leading products in a highly regulated industry, which supports our efforts to build shareholder value.”

Manufacturing Site Transfer Activities

The process of transferring these products to Draxis Pharma and validating manufacturing procedures for each new product was initiated in late 2006 and will continue through 2007 and 2008. Improvements to the existing semi-solid manufacturing facilities were undertaken during the recent regular shutdown of operations for preventative maintenance during June and July of 2007. Some compounding rooms were enlarged and supplied with required services to accommodate new equipment and additional floor space was created through the construction of a new mezzanine within the existing Draxis facility. Capital costs for facility improvements and new equipment specific to this contract will be recovered through a financing agreement.

Commercial production of the products is scheduled to start as soon as late 2008 and ramp up to achieve near full utilization of existing capacity for non-sterile semi-solid products by mid-2009. The contract will result in the creation of approximately 80 to 100 new positions at Draxis operations in the Montreal area.

Additional Draxis Facility

With the signing of this contract, a second Draxis facility in the Montreal area will be required in order to meet increased logistics and secondary packaging activities. This is due to the large number and wide range of finished product formats represented by this new business. All products will be formulated and filled in the existing facility in Kirkland, Quebec. The new secondary facility will be used for operations such as labeling, assembling different product configurations for different markets, cartoning, shipping etc.

This new facility is expected to open during the summer of 2008 and will initially be staffed with approximately 50 Draxis employees. This second facility marks the first expansion by Draxis Health beyond its existing 247,000-square-foot, FDA-approved production facility in Kirkland.

About Draxis Health Inc.

Draxis Health, through its wholly owned operating subsidiary, Draxis Specialty Pharmaceuticals Inc., provides products in three categories: sterile products, non-sterile products and radiopharmaceuticals. Sterile products include liquid and freeze-dried (lyophilized) injectables plus sterile ointments and creams. Non-sterile products are produced as solid oral and semi-solid dosage forms. Radiopharmaceuticals are used for both therapeutic and diagnostic molecular imaging applications. Pharmaceutical contract manufacturing services are provided through the Draxis Pharma division and radiopharmaceuticals are developed, produced, and sold through the DraxImage division. Draxis employs about 500 staff in its Montreal facility. For more information, visit www.draxis.com.