A surge in demand for contract manufacturing has seen Toronto-based Patheon's revenues grow from strength to strength, with the company announcing last month its fourth-quarter profits jumped 180 per cent to $8.4 million (€7 million).
Under the agreement, Merck has awarded Patheon three new projects as the first step in their new relationship.
One project is a late-stage development product for Patheon's Caguas, Puerto Rico, facility, the second involves activity at Patheon's Cincinnati facility and the third involves activity at Patheon's Toronto Regional Operations in Mississauga, Canada.
Subject to regulatory approvals, commercial revenues from these projects for Patheon will start coming in from 2007.
Patheon says it currently provides development services in connection with these projects.
Merck has had a long relationship with a Porto Rican pharmaceutical manufacturer Patheon bought in 2004, MOVA, which commenced with a ten-year supply contract in 1987 and continues to this day.
Bu there are concerns around the upcoming patent expiration of Zocor, a Merck drug made at MOVA that generates annual revenues of around $45 million (€37.4 million).
"We are very pleased that we are building on the strong foundation established by MOVA and look forward to the opportunity to deepen our relationship with Merck as a strategic supplier of commercial manufacturing and development services in the future," said Patheon's CEO Robert Tedford.
Contract manufacturing of pharmaceuticals in North America is currently a $6.25 billion (€5.3 billion) market, forecast to grow at a compound annual rate of 10.5 per cent from 2004 to 2011.
Due to the sizeable investment required for manufacturing plants, companies are increasingly outsourcing the manufacturing of both existing and new drugs to contract manufacturing organisations (CMOs) like Patheon, enabling pharmaceutical and biotechnology companies to focus on research, sales and marketing.
"As Merck implements its new supply strategy, we look forward to working with top-tier manufacturers, such as Patheon, to more effectively leverage external manufacturing across a broad spectrum of capabilities," commented Willie A. Deese, president of Merck's manufacturing division.
Patheon runs a network of 14 facilities in the US, Canada and Europe, employing more than 5,900 people and serving a client base of 180 pharmaceutical and biotechnology companies.
In November it received the 2005 Contract Manufacturing Company of the Year Award from consultancy firm Frost & Sullivan, in recognition of its customer service and innovative market growth strategies.