By Mike Boyer
The Cincinnati Enquirer

A leading Toronto drug manufacturer has agreed to buy Aventis Pharmaceuticals Inc.'s Reading plant, maintaining its 530 jobs.

Patheon Inc., which operates 10 pharmaceutical plants in Canada and Europe, said it would pay about $30 million for the 30-acre Aventis plant and inventory.

The acquisition, expected to close by yearend, is Patheon's first in the United States, a market that represents more than a third of its $400 million in revenues, said Robert Tedford, president and chief executive officer.

"A U.S. presence is strategically important to us," he said.

Mr. Tedford and other Patheon officials who met with Aventis employees Wednesday said all the plant's workers and management would be retained.

"It should be seamless transition," he said.

In addition, he said, Patheon would be investing up to $23 million in the plant in the next few years as it attempts to expand U.S. operations.

Mr. Tedford said Patheon will finance the purchase through its existing credit facilities. It also expects to obtain an undetermined amount of long-term financing through the state of Ohio.

Mr. Tedford said Patheon thinks that the 372,000-square-foot manufacturing plant is operating at about half-capacity. The plant produces 65 different products sold in 18 countries.

In addition, an adjoining 85,000-square-foot development operation is only half-occupied. Patheon wants to use that area to develop a pharmaceutical development services business, providing formulation development, clinical trial manufacturing and other services for new drugs.

Mr. Tedford told investment analysts that Patheon's efforts to develop that business in Canada has been hampered by difficulty attracting scientific talent.

"Cincinnati is in close proximity to a number of U.S. educational institutions," he said. The Cincinnati/Northern Kentucky International Airport also provides quick access to U.S. customers.

Reading Mayor Earl Schmidt said: "We feel the sale will be a positive for the community. Aventis didn't consider this a critical location, but the new company does.'"

He said Patheon's growth plans could mean more jobs at the plant. The Aventis complex, Reading's largest employer, dates back more than 60 years to the William S. Merrell Co., which later became Marion Merrell Dow. In 1995, Marion Merrell Dow was acquired by German chemical giant Hoechst, and the business was later merged with French-based Rhone-Poulenc SA to create Aventis SA.

A portion of the complex is being developed by the University of Cincinnati as a genetic research institute.

Matt Tidwell, spokesman for Aventis Pharmaceuticals, said three things triggered his company's decision to sell the Reading plant:

Aventis has too much manufacturing capacity. It also has plants in Kansas City, Montreal and San Juan, Puerto Rico.

The company is putting more focus on prescription rather than branded drugs.

Aventis, like all drug companies, is looking to reduce its costs.

Patheon, founded in 1973, is part of the outsourcing trend in the pharmaceutical industry. It doesn't produce drugs under its own name but manufactures them for other companies, both startups and large drug makers like Aventis.

Mr. Tedford said companies such as Patheon are able to operate more efficiently than traditional drug companies because they don't have high research and development or marketing costs.

In addition, they can generate more revenues producing drugs for a variety of other companies.

Patheon said it expects the acquisition to push its U.S.-based revenues to more than 50 percent. The United States is the largest pharmaceutical market in the world.

Patheon will assume production of the drugs Aventis now produces at the plant, including 10 contracts the plant has to produce drugs for other companies.

Mr. Tedford said Patheon, whose shares are traded on the Toronto Stock Exchange, expects first-year revenues from the plant of about $95 million. About 28 percent of that amount is from products made for Aventis. The balance is for other third-party contracts.

E-mail mboyer@enquirer.com