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Contract manufacturer AMRI to go private

Private equity firms Carlyle and GTCR partner for $1.5 billion deal

by Michael McCoy
June 6, 2017 | A version of this story appeared in Volume 95, Issue 24

Credit: AMRI
One of AMRI’s facilities is this Rensselaer, N.Y., site, which handles controlled substances as well as scale-up of highly potent compounds.
A photo of a reactor in AMRI’s Rensselaer, N.Y., facility.
Credit: AMRI
One of AMRI’s facilities is this Rensselaer, N.Y., site, which handles controlled substances as well as scale-up of highly potent compounds.

In the latest deal to hit the pharmaceutical contract manufacturing industry, Albany Molecular Research Inc. has agreed to be acquired by two private equity firms for more than $1.5 billion, including debt.

The two investment firms, Carlyle Group and GTCR, are paying $21.75 per share, which is a 42% premium to AMRI’s average share price prior to April 5, when rumors of a possible sale emerged.

The deal is the third large transaction in recent months involving big suppliers of manufacturing services to the drug industry. In December, the Swiss giant Lonza agreed to acquire Capsugel, a maker of gelatin capsules and other drug delivery products, for about $5.5 billion. Just last month, Thermo Fisher Scientific said it will buy Patheon, which makes both pharmaceutical chemicals and finished-dose drugs, for $7.2 billion.

Founded in 1991 by Thomas E. D’Ambra, a one-time research chemist at Sterling Winthrop, AMRI is considered a pioneer in drug contract research. Under D’Ambra’s leadership, it expanded into manufacturing and biopharmaceutical services and amassed facilities in the U.S., the U.K., India, and Singapore.

D’Ambra retired at the end of 2013 and turned the reins over to William S. Marth, a former Teva Pharmaceutical Industries executive. Marth picked up the pace of acquisitions, buying two European pharmaceutical chemical makers—Italy’s Euticals and Spain’s Gadea—for more than $500 million combined. It also bought several smaller firms.

Thanks to the acquisitions, AMRI’s sales have grown from about $225 million in 2012 to $570 million last year. Marth has said his goal is to create a $1 billion-per-year firm.

But Marth wasn’t able to solve the lack of profitability that has long plagued AMRI. In its early years, the company enjoyed royalties gained from its discovery of a new route to fexofenadine, the active ingredient in the allergy medicine Allegra. But the royalty stream ended in 2015.

AMRI lost a few million dollars each year from 2012–15 and then more than $70 million last year. It is also weighed down by some $600 million in debt stemming from largely from its acquisition spree. The firm’s stock price has been sluggish since the beginning of 2015.

Carlyle and GTCR say they have been impressed by AMRI’s direction. “We believe AMRI is uniquely positioned to capitalize on an increased trend for outsourcing of pharmaceutical products and services and look forward to partnering with the AMRI team to achieve its strategic objectives and drive value for all of AMRI’s stakeholders,” says Dean Mihas, head of GTCR’s health care group.



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