In 2006, Agilent bought a 33,500-square-foot plant in Colorado, US, for manufacturing nucleic acid active pharmaceutical ingredients (APIs). Agilent subsequently expanded the facility to meet the demand of the oligonucleotide sector for more capacity and additional capabilities.
Over 10 years after buying the Colorado facility, Agilent revealed plans to build a new nucleic acid plant in the state in Frederick. The plant, which recently opened, doubles Agilent’s capacity, suggesting it can grow its oligonucleotide business from around $100m (€90m) today to $200m by the time the Frederick facility is fully booked.
Talking at the Piper Jaffray Healthcare Conference earlier this month, Bob McMahon, chief financial officer at Agilent, discussed how long it is likely to take to fill the new facility.
McMahon said, “We're expecting that can get up to full capacity by the end of the year. It certainly can go faster than that. It's not for lack of customer demand, it's really us making sure that we're providing and scaling up that in a very high quality manner for our customers.”
There are reasons to think Agilent may need to add more capacity in the future. Today, Agilent’s oligonucleotide business mostly provides APIs for use in experimental therapies that are still being tested in humans.
If some of those therapies come to market, they could sell in volumes well above the amounts used in clinical development. In that scenario, Agilent may need additional capacity to meet the demands of both clinical and commercial-stage products.
Agilent foresaw the potential need for additional capacity when it designed the Frederick facility. As such, the facility has space for two additional manufacturing lines.
For now, Agilent is working to fill the one existing manufacturing line at the plant but a decision on whether to build a second line is on the horizon. McMahon thinks Agilent may make a decision next year and then spend 12 to 18 months installing the line, suggesting the additional capacity could go live late in 2021 or early in 2022.
If the demand is there, the economics of adding the additional line are likely to be favourable. Agilent spent around $185m on the Frederick facility but McMahon thinks the additional lines will cost in the region of one-third of that amount.
With each new line adding $100m in annual revenue capacity, Agilent has the basis of a facility that could generate $300m a year once the two additional lines are operational.