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CORRECTED-New factory puts Iceland in biosimilar drugs race

LONDON (Reuters) - Iceland is joining the race to make copycat versions of complex biotech drugs with an investment of $250 million in development and manufacturing by Alvotech, a sister company of privately owned U.S.-based Alvogen.

The money will pay for a 11,800 square meters facility in Iceland that will open in early 2016. It will also fund clinical trials of the group's antibody drug copies.

Alvotech was founded by Icelandic entrepreneur Robert Wessman, who also heads Alvogen and who has a track record of building generic drug businesses. He ran Actavis until four years before its 2012 sale to Watson.

Wessman said Iceland was a logical location for production, since it was midway between European and the U.S. markets. The country also has few patents, meaning supplies can be made there and then shipped to markets which are patent-free.

Making copies of injectable biotech drugs is tricky because they are produced in living cells, which means they can only ever be similar, rather than exact replicas of the originals.

That has left many doctors wary of using so-called biosimilars.

Nonetheless, a number of generic drug companies have been stepping up investment in the field as a wave of blockbuster antibody treatments for cancer, rheumatoid arthritis and other diseases start to lose patent protection.

Existing players in the field include Sandoz, the generics arm of Novartis; Hospira, which is working with Celltrion of South Korea; Teva Pharmaceuticals; and Wessman's old firm Actavis, which has a tie-up with Amgen.

Wessman, who heads an investment fund with a 40 percent stake in Alvogen, has big ambitions for the group, although he intends to keep it private.

He told Reuters that Alvogen was expected to have sales of around $500 million in 2014 and his goal was to make it among the top 10 generic drugmakers within a few years, which would imply sales of some $1 billion.

Biosimilars will be an important driver of that future growth, he argues, since the opportunity for introducing new products based on copies of traditional tablet-based medicines is dwindling as the number of molecules going off patent in the next 10 years declines.

Alvogen currently markets certain biosimilars in selected regions through alliances with other firms including Hospira.

(The sales figure has been corrected to $500 million, not billion, in paragraph 10, dropped word in penultimate paragraph added)

(Reporting by Ben Hirschler; editing by Elaine Hardcastle and Tom Pfeiffer)

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