Draxis to create up to 100 jobs after chosen by J&J for contract manufacturing

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Draxis to create up to 100 jobs after chosen by J&J for contract manufacturing

 

6 days ago

MONTREAL (CP) — Pharma company Draxis Health Inc. (TSX:DAX) is building a new Montreal plant and hiring up to 100 people after the company's contract manufacturing division expanded its existing relationship with Johnson & Johnson, one of the world's biggest consumer products companies.

 

The contract expansion will lead to between 80 to 100 new positions at Draxis Pharma operations in the Montreal area and require the building of a new secondary plant, in addition to the current Draxis manufacturing plant in suburban Kirkland, the company said Wednesday.

 

On the Toronto Stock Exchange, Draxis stock jumped 34 cents to trade at $5.39, a gain of 6.7 per cent as investors reacted positively to the news.

 

Draxis said the new deal with Johnson & Johnson Consumer Companies Inc. could mean another US$120 million in revenues over five years to the Canadian company. In addition, the transfer of equipment and production technologies, now in progress, is expected to generate additional revenues this year and next of between US$6 million and US$8 million.

 

The supply deal, which runs to the end of 2013 and can be extended, involves the manufacturing of non-sterile specialty semi-solid products currently sold in the United States.

 

Commercial production is expected to begin in 2009.

 

"The signing of this contract is a reflection of the solid business model at Draxis," said Martin Barkin, president and CEO of the Toronto-area company. "We are honoured to have been selected from more than 80 international contract manufacturers under a rigorous and comprehensive global selection process conducted over an extended multi-year period.

"This contract includes prescription and non-prescription products and will significantly improve capacity utilization in the semi-solids section of our non-sterile operations."

 

As a result of the manufacturing deal, Draxis plans to build a new secondary plant to handle labeling, product assembly for different markets, cartoning and shipping.

 

The new operation is slated to open next summer and will complement the company's production plant in Kirkland, in west-end Montreal.

 

The jobs expansion is good news for the local Montreal economy, which has also seen other drug developers expand operations in recent months.

 

In June, global drug giant GlaxoSmithKline (NYSE:GSK) announced it has spent $50 million to upgrade its laboratory north of Montreal into the North American research and administrative headquarters for its vaccine division.

 

GlaxoSmithKline, based in Britain, is a world leader in the vaccine business. The company has 3,300 employees in Canada, including 1,400 in Quebec.

 

Draxis, based in Mississauga, Ont. makes sterile products such as injectable liquids, ointments and creams, non-sterile products as well as radiopharmaceuticals for diagnostic imaging and treatment.

 

The company employs about 500 people at its Montreal plant.

 

Last year, Draxis generated a profit of US$11.5 million on revenues of just under US$90 million.