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Roche to expand biotech business

The new facilities will be used to develop cancer drugs (Roche)

Swiss pharmaceutical giant Roche is to spend SFr800 million ($640 million) on two new biotechnology facilities to make cancer drugs.

The company plans to build a new facility at its headquarters in Basel and an additional centre in Germany over the next three years.

The company, which is the world’s leading maker of cancer drugs, said the new research centres would be used to make ingredients for two anti-cancer medicines, Avastin and Herceptin.

Avastin – which is used in colorectal cancer to inhibit the growth and spread of the disease – was recently given the green light by United States regulators.

Herceptin is used for the treatment of breast cancer and targets a gene associated with the aggressive growth of cancer cells.

“This investment underscores our intention to rank among the world’s top biotechnology companies in every area, from research and development to production and marketing,” said Roche CEO Franz Humer in a statement released on Wednesday.

Sales projection

The new drugs are tipped by analysts to generate annual sales of around SFr1.3 billion each.

“Roche will become increasingly reliant upon revenue growth from biotech products,” said Dutch bank ABN Amro.

“Today’s news appears to be prudent housekeeping to ensure that manufacturing supply matches future demand, but it is not clear whether these capacity hikes are in line with increased internal sales expectations for the products.”

Share in Roche rose by 0.4 per cent to reach SFr128.75 during early trading on Tuesday, outperforming the European drug sector.

Creating jobs

The company’s expansion plans are expected to generate around 150 new jobs at each site.

Roche, which recorded a SFr4 billion loss in 2002, was once shunned by investors as Europe’s most troubled pharmaceuticals giant.

But its shares now outperform many of its rivals and the company made a net profit of SFr3.1 billion last year.

Roche has for some time been banking on bringing Avastin to market and is working with European authorities to achieve regulatory approval for the drug.

News of the expansion plans overshadowed a separate announcement that it would stop mid-stage trials of an experimental treatment for colorectal cancer as a result of an unexpected toxic build-up in patients.

swissinfo with agencies

Key facts

Roche will invest SFr800 million in two new biotechnology centres over the next three years.
The company made a net profit of SFr3.1 billion in 2003, after recording a loss of SFr4 billion the year before.
Operating profit of core businesses before exceptional items rose to SFr6.1 billion.

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