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AaiPharma to boost work force, add to product line

Jul. 1, 2003
Charleston Post and Courier
By Jonathan Maze
Two years after buying a struggling drug manufacturing plant from the Medical University of South Carolina, aaiPharma is boosting the North Charleston operation.

The drug company plans to add as many as 20 workers to the 50 it employs at the plant over the next year, and it hopes to multiply the amount of product manufactured there five-fold.

The facility now produces between 600,000 and 1 million doses of various medications annually, said David Gelber, director of operations at AAI Development Services, the arm of aaiPharma that runs the facility.

The plan is to increase production to as many as 5 million doses annually over the next couple of years. Most of the drugs it produces are injected.

Such growth could be a boon to MUSC, which sold the facility in 2001 at a discounted price of $5.8 million. In exchange, MUSC receives 4 percent of all annual revenues over $8 million generated at the facility over a four-year period that ends in June 2006.

Last year, the agreement's first, aaiPharma exceeded that benchmark and paid the university $300,000. The corporation has done even better in the past year, giving MUSC reason to believe that its royalties could be higher.

Formerly known as Applied Analytics Industries Inc., the company spent the first 20 years of its existence contracting with other pharmaceutical companies to do all sorts of drug development work, from research to manufacturing.

That remains a big part of the company's business. But more than three years ago aaiPharma decided to start developing its own products.

AaiPharma now has its own medications in the development pipeline. And it started acquiring existing medications from other corporations, with the goal of improving on those drugs.

Because of this strategy, aaiPharma's sales have soared. Revenues grew from $141 million in 2001 to $230.5 million in 2002, due largely to $128.5 million in sales of its own drugs last year. Its product sales in 2000 amounted to just $7.3 million. Net income last year nearly tripled, from $5.9 million to $17.3 million.

One of aaiPharma's drugs is Brethine, which the company acquired from Novartis in 2001. It is used to treat patients with asthma, bronchitis and emphysema.

The company applied for FDA approval to start making Brethine in North Charleston. It expects that approval in nine months to a year, and the local plant plans to start looking for additional workers in the fall.

AaiPharma is working on expanding the unit's manufacturinging capacity, in part by converting what had been storage areas into work space.

The 48,000-square-foot facility manufactures small and mid-sized amounts of medications. It's the company's only sterile manufacturing plant, where employees are clad in head-to-toe suits. Both those points make it a niche player.

Demand for its services is running high, according to Vijay Aggarwal, president of AAI Development Services, because most drug-making facilities turn out larger batches of pharmaceuticals rather than the smaller runs in which aaiPharma specializes.

That advantage is a big reason why the company says it's focusing so much attention on the local location. Aggarwal said that as more genetically engineered drugs are developed for intravenous use, the plant should see even more work. "There are 50 employees here," Aggarwal said. "And a lot of them work almost seven days a week."

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