UCB Unveils New Biotechnology Plant

UCB SA (UCBJF) recently opened a new biologics pilot production unit at Braine-L’Alleud, Belgium. The company has invested more than €65 million on this biotechnology pilot plant project. The plant is expected to become fully operational in 2013, once the validation process is completed.

The plant has four bioreactors and spans over 51 hectares. The unit is expected to create employment opportunities for approximately 100 people.

The plant will facilitate development of UCB’s pipeline candidates and enable rapid initiation of clinical studies by optimizing their manufacturing process. We note that more than half of UCB’s pipeline candidates are of biotechnological origin.

The company is gearing up for increasing demand for innovative biologics and the opening of the biotechnology pilot plant is a step toward that goal. Biotechnology represents a high potential market with approximately 33% drugs for human use being of biotechnological origin.

UCB’s revenues primarily comprise sales of Cimzia, Vimpat, Neupro and Keppra. In the first half of 2012, Cimzia, Vimpat and Neupro – accounted for about 24% of total revenues of UCB. Keppra, the key product of the company, is facing generic erosion, primarily in North America and Europe.

In such a scenario, it is crucial for the company’s pipeline to deliver. UCB has several late-stage candidates in its pipeline, which if developed successfully, would help to replace revenues lost to generic competition. UCB is also working on expanding the label of currently marketed products, such as Cimzia and Neupro.

We currently have a Zacks #3 Rank (short-term Hold rating) on the stock.