Roche to spend $880 mln on manufacturing, create 500 jobs


* To invest 800 mln Swiss francs in manufacturing ofbiologic drugs

* Will create 500 jobs in Germany, Switzerland and UnitedStates

* Many of Roche's promising new medicines are biologics

By Caroline Copley

ZURICH, Oct 14 (Reuters) - Swiss drugmaker Roche isto invest 800 million Swiss francs ($880 million) in its globalmanufacturing facilities over the next five years, creating 500jobs, as it prepares for growing demand for its biologicmedicines.

The world's largest maker of cancer drugs, which employsaround 80,000 people in over 100 countries, said on Monday theinvestment would increase its production capacity in Penzberg inGermany, Basel in Switzerland and Vacaville and Oceanside in theUnited States.

The expansion shows Roche's confidence in its developmentpipeline of new cancer drugs and bucks a trend of cost-cuttingby some big drugmakers in recent weeks in response to slowingsales growth.

Last week Israel-based Teva, the world's largestmaker of generic drugs by sales, said it would cut 5,000 jobs,while Merck & Co plans to slash annual operating costsby $2.5 billion and eliminate more than 10 percent of itsworkforce.

Shares in Roche were down 0.2 percent at 238 francs by 0837GMT, when the Stoxx Europe 600 healthcare sector index was down 0.1 pct.

Vontobel analyst Andrew Weiss said he was not surprised bythe investment as manufacturing is a core competency of Rocheand the company is at present the leanest drug company with only15 manufacturing sites worldwide.

Many of Roche's most promising medicines, such as rheumatoidarthritis treatment RoActemra and new breast cancer drugsKadcyla and Perjeta are biologics, which unlike chemical drugsare proteins or cells derived from living organisms that arehard to replicate.

The Basel-based firm has also mostly been spared the pain sofar of patent expiries ravaging rivals as many of itstop-sellers are biologics which have not faced genericcompetition.

"As the world's largest supplier of biologics, Roche iscommitted to making the necessary investments to ensure ongoingsupply of these medicines at the highest quality standards,"�said Daniel O'Day, chief operating officer of Roche'sPharmaceuticals Division.

Roche said it would invest approximately 260 million Swissfrancs ($286 million) at its Vacaville and Oceanside sitescreating around 250 new jobs. In Penzberg, it will invest around350 million francs ($385 million), creating roughly 200 jobs.

It will also build a production facility in Basel tomanufacture antibody-drug conjugates (ADCs) - also known as"armed antibodies" which can take drugs directly to cancercells.

The company won U.S. approval in February for Kadcyla, itsfirst such antibody-drug conjugate, which treats breast cancerwith fewer side effects such as hair loss.

Roche has a further eight ADCs in clinical development and16 in pre-clinical development.

Swiss drugs industry supplier and life sciences group has also upped its bet on growing demand for biologicsand in January said it would expand its ADC manufacturingcapacity in Visp, Switzerland.

Lonza manufactures the chemical linker that connects theantibody to cytotoxic drugs.

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