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

* To invest 800 mln Swiss francs in manufacturing of biologic drugs

* Will create 500 jobs in Germany, Switzerland and United States

* Many of Roche's promising new medicines are biologics

By Caroline Copley

ZURICH, Oct 14 (Reuters) - Swiss drugmaker Roche is to invest 800 million Swiss francs ($880 million) in its global manufacturing facilities over the next five years, creating 500 jobs, as it prepares for growing demand for its biologic medicines.

The world's largest maker of cancer drugs, which employs around 80,000 people in over 100 countries, said on Monday the investment would increase its production capacity in Penzberg in Germany, Basel in Switzerland and Vacaville and Oceanside in the United States.

The expansion shows Roche's confidence in its development pipeline of new cancer drugs and bucks a trend of cost-cutting by some big drugmakers in recent weeks in response to slowing sales growth.

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

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

Vontobel analyst Andrew Weiss said he was not surprised by the investment as manufacturing is a core competency of Roche and the company is at present the leanest drug company with only 15 manufacturing sites worldwide.

Many of Roche's most promising medicines, such as rheumatoid arthritis treatment RoActemra and new breast cancer drugs Kadcyla and Perjeta are biologics, which unlike chemical drugs are proteins or cells derived from living organisms that are hard to replicate.

The Basel-based firm has also mostly been spared the pain so far of patent expiries ravaging rivals as many of its top-sellers are biologics which have not faced generic competition.

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

Roche said it would invest approximately 260 million Swiss francs ($286 million) at its Vacaville and Oceanside sites creating around 250 new jobs. In Penzberg, it will invest around 350 million francs ($385 million), creating roughly 200 jobs.

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

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

Roche has a further eight ADCs in clinical development and 16 in pre-clinical development.

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

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