Great investments of pharmaceutical companies in the Netherlands

26 January 2021

The Netherlands is very popular among 'big pharma companies' as a production location. Reliability and predictability play a major role in this, as does the arrival of the European Medicines Agency. 'The Netherlands is on the map.'

Pharmaceutical companies are currently investing on an unprecedented scale in the Netherlands. 3 large American companies are investing billions of euros in new factories and expanding existing production facilities. Dozens of other companies will follow, spreading across the Netherlands.

This is evident from an inventory by FD. The willingness to invest has been fueled by the corona pandemic: a few pharmaceutical companies are investing large amounts of money in the development and production of vaccines. But the trend has been going on for some time. Many new, biological medicines are relatively often produced in the Netherlands and not in countries such as India or China.

Best-selling cancer drug

Predictability and reliability play a major role in the choice for the Netherlands, says Ben Lucas, general manager of MSD Netherlands. 'These are important considerations for investments that only yield an optimal return after five or ten years.'

MSD and its American parent company Merck & Co are investing $ 16 billion worldwide to expand their production. A 'considerable amount' is intended for the Netherlands. In Oss, the company is increasing its production capacity to meet the demand for Keytruda, the best-selling cancer drug in the world. In Boxmeer and De Bilt, MSD has its activities for veterinary medicines, especially vaccines, employing 2,400 people. The company is building a new factory in Boxmeer.

Most construction activities take place in Haarlem. MSD is building new vaccine production lines there as well as a new lab. There is also a new 'cold store', a gigantic cold store with a capacity of 5000 pallets. From here, MSD sends 80 million vaccines per year to 140 different countries.

TURNAROUND ALREADY STARTED

A third American superpower - pharmaceutical group Gilead and its subsidiary Kite - set up a completely new factory in Hoofddorp last year. Advanced cancer medicines are made there. The company is preparing for further growth. MSD, Janssen and Kite each hired hundreds of new employees last year and are still recruiting a lot of staff.

Janssen invests large amounts in the Netherlands, including in research and development. Last year, this amounted to more than € 500 million. According to the annual overview of the Technisch Weekblad, the American pharmaceutical company was the fourth largest private investor in R&D in 2019. Only ASML, Philips and KPN surpass Janssen.

According to Lucas of MSD, there is often an incorrect image that the pharmaceutical industry is disappearing from the Netherlands. This image was largely inspired by Organon's demise more than ten years ago, after the company was merged into MSD. Organon was the largest pharmaceutical company in the Netherlands for a long time.

Figures show that a turnaround has long been set in motion. According to the TNO report 'Growth sectors in the Netherlands', the pharmaceutical sector in the Netherlands has grown by an average of 6.2% per year in recent years. That was the highest growth rate of all main sectors that TNO distinguishes.

ORGANON & CO

Symbolical for the change is that Organon is now also rising from its ashes. The resurrection of the Dutch pharmaceutical company stems from the decision of Merck & Co and MSD to divest part of their activities. This will create a new company later this year with a turnover of approximately € 6 billion that will be called Organon & Co. Of the 6,000 MSD employees, 1,100 will soon be transferred to the new company. The Dutch branch in Oss Moleneind will be responsible for approximately 20% of Organon production.

Merck & Co is divesting the business unit because growth is lagging behind that of cancer drugs, for example. Nevertheless, investments are being made in Oss Moleneind, including in the construction of a new warehouse, good for the storage of 2500 pallets.

MSD has also invested in doubling its production of Implanon, a contraceptive stick that is placed under the skin to protect women against unwanted pregnancy for three years. The expansion was made possible in part by a donation of $ 8 million from the Gates Foundation.

In addition to the American superpowers, there are dozens of other pharmaceutical companies investing millions of dollars. For example, two German companies, Wacker and Halix, each built new production lines for at least € 40 million in Amsterdam and Leiden respectively. The two companies have won important orders for the production of corona vaccines.

BIOTECH IS THRIVING

Schouw of the VIG also points to the extensive investments by hundreds of biotech companies that develop new medicines. The most striking figureheads are companies such as Galapagos and Pharming, which is currently building its own factory in Oss. The largest European biotech company - Genmab from Denmark - is investing heavily in its R&D center in Utrecht.

The processing of the crucial protein into a medicine will soon take place in the Netherlands. Pharming is currently building the new factory in Oss for the purification, filtering and concentration of the substance.

The last step of the production process - the filling and freeze-drying of vials with the medicine - has been taking place in Oss at BioConnection for years . That company installed a second production line last year, thanks to Pharming, which bought a minority stake in BioConnection for € 4 million. The company is now also able to, for example, fill vaccines in sterile conditions.

The willingness to invest is smaller among manufacturers of generic, patent-free medicines, including antibiotics. The European Union would like to bring the production of these medicines back to Europe in order to improve security of supply. However, many producers argue that new investments in the Netherlands and Europe are only worthwhile if, when purchasing, attention is paid less to the lowest price and more to quality and sustainability.

Find out why international companies Fujifilm and Amgen have chosen Brabant as the location to expand their pharmaceutical productions.

For a broader picture of the sector download the in-depth study ‘Life Sciences & Health Sector‘ commissioned by the Brabantse Ontwikkelings Maatschappij (BOM).

Source: Investeringsgolf van farmabedrijven in Nederland, Farma industrie is terug van weggeweest