Alvogen – a multinational pharmaceutical company that focuses on complex generic products and whose initial plans were to invest in Malta and Iceland – has ended up sidelining Malta and allocating €155 million towards a project in Iceland instead, this newspaper has learnt.

The project consists of the provision of a science centre and work is expected to be finalised within two years. The building will accommodate the company’s international offices and the development, as well as the production, of biotech pharmaceuticals.

Sources told this newspaper that one of the reasons the company hesitated over its plans to invest in Malta was because of the bureaucratic procedures that foreign companies are required to go through in establishing a business here, despite the new government’s pro-business attitude.

A quick internet search also produced an Icelandic news report published in April last year confirming that both countries were in Alvogen’s sights at the time “since the two countries were eligible under the new high-tech sites Alvogen planned to establish”.

This newspaper is informed that the 65 Actavis employees, who mainly worked in the company’s research and development department in Bulebel and who were made redundant soon after the March general election, were to be absorbed by Alvogen in the event that it set up shop in Malta.

With regard to Alvogen’s plans for Malta, negotiations had been initiated between the company and the previous administration, and following the change in government last March and the Actavis’ redundancies, these discussions had continued at a steady pace on the initiative of newly appointed Economy Minister Chris Cardona.

In November last year, Dr Cardona told this newspaper that a new pharmaceutical company would be moving to Malta in a matter of weeks, adding that efforts by the government for the Actavis R&D employees to be re-employed within the industry were ongoing.

When contacted on the subject of Alvogen, the Economy Ministry told this newspaper that, due to the sensitivity of the situation, it would rather decline from revealing any details regarding the “the ongoing negotiations” between the government and Alvogen “due to the situation’s sensitivity and commercial nature”.

However, all the indications are that the deal has fallen through.

The Ministry warned that “any speculation based on hearsay about the possible investment may lead to pushing away the investment and the employment possibilities such investment may create”.

Alvogen is controlled by Robert Wessman, who took over Actavis in 1999 when it was a failing 90-employee domestic generic pharmaceutical manufacturer in Iceland and who, within seven years, is understood to have brought Actavis to number five worldwide, with 11,000 employees, active in 40 countries, global manufacturing a turnover of $1.6 billion.

Mr Wessman became executive chairman of Alvogen in July 2009 and is now both chairman and CEO of the group.

In a separate deal last December, Alvogen and Taiwanese Lotus Pharmaceuticals merged their Asian operations. Alvogen became a 67 per cent shareholder in Lotus, while Lotus is to use its funds to acquire Alvogen’s Asian operation.

At the time, Alvogen agreed to become the majority shareholder of Lotus through a private placement of newly-issued shares, acquiring up to 151 million shares in the company. The total amount involved was approximately $200 million.

Following this deal, Alvogen and Lotus announced that Lotus was using the proceeds of the share issue to acquire several of Alvogen's businesses in Asia.

The combination of Alvogen’s strong presence in the US, Central and Eastern Europe and Asia and Lotus’ strategically important foothold in the Taiwanese market and its growing US product pipeline is expected to generate significant opportunities to drive revenue growth and margin enhancement and create further value for the two companies. Both Alvogen and Lotus will benefit from the increased scale, portfolio and geographic reach.

In a report published on eyjan.pressan.is, and before Alvogen backtracked on its plans for Malta, Dr Helen Foster Kristjansson, Quality Department director at Alvogen and the individual entrusted with the Icelandic project design and structure, was quoted as saying that “Iceland and Malta are Alvogen’s preferred places for drug development and patent environment of these countries allows companies to begin the development and production of drugs before their patents expire, which helps create a competitive advantage for Alvogen.

“In recent months, Alvogen has evaluated the preferred location for the facility and the decision will be available in the coming weeks,” she said.

Alvogen’s main markets are the US, Europe and Asia. It operates in 30 countries and has a total of 1,700 employees.

Around 200 Alvogen employees will work in the building that will house the company’s international offices. The development and production of biotech medicine will also be accommodated in the building, which will have a total area of around 11,000 square metres.

The company is expected to begin its operations in Iceland as early as next year.

Questions submitted to Mr Wessman by this newspaper remain unanswered.