US biotechnology firm, Genentech, is further beefing up its manufacturing capabilities in a bid to meet increasing demand.

The company, which has now completed the purchase of a facility from Biogen Idec [[20/06/05g]], said that the recent positive results from several Phase III clinical trials will likely increase demand for its products. “In order to maintain adequate supply, we will need to implement all our priority capacity expansion projects and achieve licensure on schedule, successfully adhere to an aggressive production plan that will utilise nearly 100% of our capacity in the near-term, and maintain a state of regulatory compliance at all our production site,” said Patrick Yang, the firm’s senior vice president of product operations.

The acquisition of the Biogen Idec facility is costing Genentech around $408 million dollars in cash, plus $9 million in closing costs. With additional costs, Genentech now expects capital expenditures in 2005 will be approximately $1.7 billion, with some $15 million in operating expenses to be incurred in the second half of 2005.

The company also said it would be paying some $30 million to fellow US biotech, Amgen, as part of an agreement to cancel the remainder of its manufacturing obligations for the rheumatoid arthritis drug, Enbrel (etanercept).

As a result, the company said that cost of sales would be higher than previously forecast – between 22% and 23% of net sales for the second quarter of 2005, and approximately 19% of net sales for the full year 2005.