Shares of Syngene International will be in focus on Tuesday after the company announced that it acquired its first biologics facility in the United States from Emergent Manufacturing Operations Baltimore, a unit of Emergent BioSolutions, for $36.5 million.
“The new site will increase Syngene’s single-use bioreactor capacity to 50,000L for large molecule discovery, development, and manufacturing services. Additionally, it will provide Syngene’s customers with continuity of supply from its four development and manufacturing facilities located in India and North America, offering services ranging from cell line development, process optimization, and both clinical and commercial supply,” the company said in its press release.
Under the terms of the agreement, Emergent will retain rights to secure manufacturing services and capacity at the facility in collaboration with Syngene. Emergent had shut the facility last year as part of its cost-cutting efforts and pivot away from contract manufacturing, as a funding crunch led to reduced research spending by its smaller biotech clients. The facility also faced quality issues during the pandemic while producing Johnson & Johnson’s COVID-19 vaccine.
However, the U.S. drugmaker stated that the U.S. Food and Drug Administration cleared the facility last year, and it is now compliant with all required guidelines.
The acquisition, expected to close in March 2025, will increase Syngene’s total single-use bioreactor capacity to 50,000 liters from 20,000 liters, bolstering its capabilities in large molecule discovery, development, and manufacturing services.
Syngene’s CFO, Deepak Jain, noted that the acquisition may result in minor dilution of operating margins in the short term due to the costs associated with the new facility.
Shares of the company fell 1.96% and underperformed its sector by 16.96% in the past year. Meanwhile, it offered 20.02% returns in the last three years. According to Trendlyne data, Syngene has worse one year returns than sector, industry, Sensex, and Nifty50.
