As the year ends, healthcare industry-focused investment firms are flexing their muscles in the pharmaceutical services sector, acquiring well-established European companies and, in some cases, combining them with other service firms in their portfolios.
Johnson Matthey has struck an agreement to sell its pharmaceutical chemical business to Altaris Capital Partners in a deal valued at $430 million. JM, which in April said it was considering a sale of the business, seeks to focus “on businesses driving growth from climate change solutions,” CEO Robert MacLeod said in announcing the sale.
According to the terms of the deal, JM will receive about $200 million on completion of the transaction. The British firm will maintain a 30% stake in the business and get additional payments on the achievement of performance targets through 2024.
JM’s pharmaceutical chemical business has about 1,000 employees and seven manufacturing and process development sites around the world. It netted $314 million in its most recent fiscal year.
Meanwhile, SK Capital Partners has completed its previously announced acquisition of most of Seqens, a French pharmaceutical services firm. Seqens was itself formed by investors and encompasses several venerable firms including Chemie Uetikon in Germany and PCAS in France.
SK revealed that it plans to combine Seqens with Wavelength Pharmaceuticals, a contract services firm based in Israel. In addition, Seqens has sold its mineral specialties businesses—including sodium bicarbonate, soda ash, and sodium silicate facilities in France and Singapore—to some of its historical shareholders.
SK says the revamped Seqens will have 24 manufacturing sites and 10 research centers. It has about 3,200 employees and annual sales of $1.2 billion.
Similarly, the investment firm Bridgepoint is behind a deal, already in the works, to combine Novasep and PharmaZell, French and German pharmaceutical services companies, respectively, into a leading European player. The combined firm will have sales of almost $600 million and about 2,000 employees across seven sites in Europe, the US, and India.
James Bruno, president of the consulting firm Chemical and Pharmaceutical Solutions, says the deals are good news for the companies being acquired. “Some of these big guys are looking to make investments” in new production capacity, Bruno says, and their new owners are likely to finance them.
As for the investors, “they see it as putting money in the bank,” he says. “That interest is going to grow.”