Siegfried’s addition of drug substance capacity is part of long-term growth strategy

Swiss-headquartered contract development and manufacturing organization Siegfried is betting on a strategic expansion of its drug substance network in the United States to better position the company to generate long-term growth opportunities.

In January, Siegfried signed agreements to purchase a Noramco commercial-scale manufacturing site in Wilmington, Delaware and a Purisys clinical active pharmaceutical ingredient (API) development and manufacturing facility in Athens, Georgia.

The acquisitions are meant to strengthen Siegfried’s U.S. footprint and expand its technological capabilities, helping the company to capitalize on small molecule drug sales and the growing regionalization of manufacturing.

Stefan Randl, chief scientific officer and ad interim chief operating officer drug substances, told Pharma Manufacturing that the CDMO’s acquisition of the two small-molecule drug substance facilities in Delaware and Georgia will add high-demand manufacturing capacity in the U.S. — the world’s largest pharmaceutical market.

Randl said the multi-purpose U.S. sites will “fit well” within Siegfried’s global network, while adding that the Wilmington site is “probably the most important” part of the acquisition providing Siegfried with a “high quality” and “highly automated” commercial-scale manufacturing facility with 150-cubic-meter reactor capacity.

“It used to be a J&J site until 2016 and then was run by SK Capital private equity for the next 10 years,” Randl commented. “A very high percentage of the people have been at the site for a long time.”   

William Blair analysts in a note to investors called Siegfried “an established leader in small molecule drug substance” and said such manufacturing is primarily performed in the rest of the world currently, leaving the CDMO “well positioned to uniquely capitalize on tight U.S. capacity moving forward.”

While revenue growth from the Wilmington site is currently in the low- to mid-single digits and below Siegfried’s target rate, the analysts said that Siegfried “expects to accelerate growth in the two to four years following acquisition close by optimizing capacity between its nearby Pennsville [New Jersey] site and pursuing new higher-growth projects,” resulting in an incremental $120 million annual revenue benefit.

Adding capacity amid customer uncertainty

Siegfried has three U.S. sites: Grafton, Wisconsin, Irvine, California, and Pennsville, New Jersey. The company plans to expand its synthesis business in the U.S. by optimizing its controlled substance capacity across the newly acquired Wilmington site and its nearby Pennsville facility, a drug substance manufacturing site for the U.S. market that also provides spray drying operations globally.

“We’re very active on the spray drying side which is a very much needed and required technology in between drug substance and drug product manufacturing,” Randl said. “We just started up a GMP spray dryer at our site in Barberà in Spain.”

Siegfried’s global network includes 13 facilities in seven countries including active pharmaceutical ingredients and intermediates (drug substance) and finished dosage forms (drug product). In February, CEO Marcel Imwinkelried told analysts that Siegfried plans to “free up” 80 cubic meters of capacity at the commercial-scale manufacturing site in Wilmington by optimizing its capacity in Wilmington and nearby Pennsville.

At the same time, Siegfried reported that customer uncertainty will weigh on drug substance sales growth in 2026. The CDMO provided “conservative” guidance due to limited visibility around a pending customer confirmation for a large contract that could impact sales growth this year. Still, Siegfried expects this to continue to contribute meaningfully to sales beyond 2026.

William Blair analyst commented in a note to investors that even if volumes are depressed, Siegfried recently won a “meaningful” contract at its Barberà del Vallès site in Spain, which could help to fill any of the potential underutilized capacity in 2027. Barberà is a drug product site that specializes in manufacturing and packaging solid oral dosage forms, including high-potency and inhalation capsules for respiratory diseases, and integrates technologies such as automation, digitization, and robotics.

“We’re using more digitalization in order to optimize the way that we are utilizing our plants,” Randl said.