Faes Farma To Expand Its Industrial Capacity With New Production Plant In The Basque Country

Faes FarmaFaes Farma experienced strong growth in previous years

Renta 4 | Faes Farma will expand its industrial capacity with the construction of a new production plant in Derio (Vizcaya) in order to meet future demand. The estimated investment will be around 150 million euros. This will be implemented over the next 4 years (2021-2024) and will require an increase in staff of about 200 workers. The new plant, which will be in addition to the existing one in Leioa, will be located in the Zamudio Technology Park, with the potential to manufacture more than 100 million units of medicines.

The project reflects the need for industrial capacity to respond to the strong growth expected by Faes Farma beyond 2024. It has experienced strong growth in previous years (TACC 13.6% from 18 million units in 2015 to 34 million units in 2020). And the internal estimate is that this will continue in the coming years (TACC 10.1% between 2020 and 2024 up to 50 million units). So that would put stress on the company’s current total capacity.

The forecasted growth is the result of geographical expansion, especially in Latin America, as well as the expansion of the licensing business. In addition, the boost to industrial capacity will enable the internalisation of some of the outsourced manufacturing activities, resulting in cost savings. It will also facilitate the ability to fulfill the manufacturing requirements expected from new product launches in the coming years.

Faes Farma has a healthy financial situation, with a net cash flow expected to exceed 85 million euros at the end of the 2020 financial year. This, combined with its high capacity for generating Free Cash Flow, allows it to undertake this project with ease.

Furthermore, the clinical trials carried out with Hidroferol, both in Andalusia and in Catalonia, for the treatment of patients with COVID-19, have been very positive. This is consistent with the first trial carried out by the Reina Sofía University Hospital in Córdoba and its results are expected to soon be published in international scientific journals. Faes Farma is planning to promote a new clinical trial with greater dimension than the previous ones in this regard.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.