Contract Service Providers Expand
Looking at the first quarter of 2014, there have been several noteworthy deals and activity among contract development and manufacturing organizations (CDMOs) and contract manufacturing organizations (CMOs).
The key deal thus far in 2014 is the formation of DPx Holdings B.V., which combines DSM Pharmaceutical Products and Patheon into one company. The private equity firm JLL Partners and Royal DSM closed on their $2.65-billion deal, announced in November 2013, in March 2014. DPx is 51% owned by JLL and 49% by Royal DSM. With headquarters in Durham, North Carolina, DPX’s global footprint includes 24 global locations across North America, Europe, Latin America, and Australia with approximately 8,000 employees. The company is led by DPx CEO Jim Mullen, former CEO of Patheon, and will be run as an independent standalone company. DPx is the parent company name and includes the business units Patheon, DSM Fine Chemicals, and Banner Life Sciences. The newly combined company has pro-forma sales of approximately $2 billion. In terms of the transaction, JLL contributed $500 million in equity to DPx, and DSM contributed DSM Pharmaceutical Products and received approximately $115 million in cash and $75 million of preferred partnerships interest, thereby valuing DSM Pharmaceutical Products at $670 million. DPx effected a plan of arrangement pursuant to the Canada Business Corporations Act with Patheon under which DPx acquired Patheon for $9.32 per share in cash, resulting in a total enterprise value for Patheon of approximately $1.98 billion.
Several other companies announced their plans to go public. In January 2014, Catalent Pharma Solutions announced that Catalent, Inc. publicly filed a registration statement with the US Securities and Exchange Commission for an initial public offiering (IPO). In April 2014, the CDMO Recipharm priced its IPO with an initial price of SEK 78 ($12 per share) on the Stockholm stock exchange.
In other deals, Par Pharmaceutical Companies, Inc. agreed to acquire JHP Group Holdings, the parent company of JHP Pharmaceuticals, a specialty pharmaceutical company that develops, manufactures and markets branded and generic sterile injectable products JHP, which focuses on the US sterile injectable drug market, also provides contract services for sterile manufacturing. In February 2014, Emergent BioSolutions completed its acquisition of the biopharmaceutical company Cangene Corporation, which included Cangene’s contract fill-finish services.
In April 2014, AMRI completed its previously announced acquisition of Cedarburg Pharmaceuticals Inc., a contract developer and manufacturer of active pharmaceutical ingredients (APIs) for both generic and branded customers, for $41 million, including the assumption of certain liabilities. AMRI had announced it was acquiring Cedarburg in late March.
Catalent Pharma Solutions increased its minority investment in Redwood Bioscience, which has site-specific protein modification and linker technologies through a proprietary platform (SMARTag) used to generate homogeneous antibody-drug conjugates.
Catalent announced in April 2013 that it had acquired an exclusive license to market the SMARTag technology and has subsequently collaborated with Redwood for the ongoing development and marketing of the technology. As part of the collaboration, Catalent took a minority equity stake in Redwood, which may increase over time up to a potential acquisition.
CordenPharma Switzerland LLC transferred its entire amino acid building blocks product portfolio at its API facility in Liestal, Switzerland to CU Chemie Uetikon GmbH, based in Lahr, Germany, effective February 1, 2014. CordenPharma Switzerland had identified Chemie Uetikon as an partner for larger-scale manufacturing of amino acid building blocks. As a result of the transfer, CordenPharma Switzerland will now focus on growing its core peptide synthesis and specialized ingredient manufacturing capabilities such as carbohydrates and synthetic lipids. Chemie Uetikon will take over the amino acid building blocks business from CordenPharma Switzerland and market them to clients globally. CordenPharma Switzerland will continue to manufacture and market pseudoproline building blocks using proprietary technology.
Several CMOs announced capacity or service expansions. Neuland Laboratories Ltd. opened a new manufacturing facility constructed as part of its collaboration with Tokyo-based API Corporation (APIC), a healthcare unit of Mitsubishi Chemical Holdings Group that produces APIs, intermediates and investigational new drugs, along with fine chemicals and reagents. The new facility, which is located in a Neuland complex in Pashamylaram, Hyderabad, is the first manufacturing facility that APIC has established outside of Japan. Under an agreement entered into in March, 2013, Neuland constructed and will operate these manufacturing facilities dedicated to providing APIC with capacity for pharmaceutical APIs and intermediates.
Kemwell Biopharma added GMP lyophilization capability to its sterile injectable offerings for biologics and pharmaceuticals. Aesica validated its high-capacity manufacturing for commercial production following a $45-million investment at its Queenborough, United Kingdom site. The purpose-built facility is capable of producing in excess of 1 billion tablets per annum and was designed with future expansion in mind. It is expected the facility will more than double its current capacity to produce over 2.5 billion tablets per year on expansion. The facility provides a 10,000-square meter expansion to the company’s existing Queenborough site and has a dedicated workforce of 55 technicians, with future expansion plans increasing the staffing level to more than 100.
Metrics Inc. opened a new $1.6-million, 4,524-square foot laboratory at its facility in Greenville, North Carolina.The new laboratory is designed for preclinical development of early-formulation prototypes and related analytical methods. The company also is adding at its facility in Greenville new equipment, a high-pressure-precise roller compactor (Gerteis Mini-Pactor) intended for for small-scale production, making it useful in a formulation development laboratory setting. Almac is establishing a new secondary packaging facility in Singapore that will open by the end of 2014. It also added new blistering technology at its US commercial packaging facility in Audubon, Pennsylvania.
Vetter announced that it had designed a flexible serialization service that formed the basis of track-and-trace programs. With this offer, the company is extending its existing services. These services include, for example, printing of Global Trade Item Numbers (GTIN) on packages, which has been requested by France and is expected to be requested by the United States in 2015. Following the successful implementation of an initial information-technology solution, Vetter began implementing an engineering platform for serialization that is expected to be operational by the end of 2014. The service will support pharmaceutical and biotech companies in implementing their own track-and-trace programs for a secured and controlled supply chain.