Recipharm to acquire Kemwell’s pharma...
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Recipharm to acquire Kemwell’s pharmaceutical CDMO businesses for SEK 1.7 bn
Pharma News

Stockholm, Sweden
Wednesday, April 20, 2016, 17:00 Hrs  [IST]

Recipharm AB has signed two separate agreements to acquire Kemwell’s pharmaceutical contract development and manufacturing (CDMO) businesses.

The first acquisition, comprising US and Swedish operations, is expected to close during the second quarter 2016, after review by the Swedish Competition Authority, while the second, comprising operations in India, is conditional on governmental approvals and expected to close before year end. The transactions will be financed by already available funds, existing credit facilities, a share issue in kind to the sellers and a proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders.

The combined entity will have a significantly enhanced reach and scale. The businesses to be acquired had 2015 preliminary net sales of approximately SEK 745 million, corresponding to 22 per cent of Recipharm’s 2015 total net sales.The acquisitions are expected to be accretive to EBITDA margin already from 2016 and are well in line with Recipharm’s overall financial objectives.

The operational presence with strong development capabilities, enhanced technology base and broad customer portfolio will provide improved access to the world’s largest pharma market. It will expand its position in emerging markets significantly, taking sales in these markets to more than SEK 800 million, dominated by sales directly to the fast-growing pharma market in India.

Major extension of Recipharm’s capabilities in India wiil provide it access to significant cost effective development operation working with customers with strong US ANDA project pipeline, will add US FDA and EU approved cost effective manufacturing options;will expand manufacturing capabilities, complementary technology to Nitin Lifesciences.

It will further strengthen Recipharm’s synergistic business model by aligning US and Indian development and technology operations with the combined company’s manufacturing capabilities in India and Europe. In addition, there are potential commercial synergies from enhanced customer offering and cross selling.

The well established API and dose form manufacturing facilities in Sweden wiil enhance opportunities for substantial cost savings and operational synergies.The strong combined cash flow generation is expected to maintain financial profile in-line with financial targets.

A share issue in kind of class B shares in Recipharm corresponding to a value of US$ 55 million (SEK 450 million), subject to approval by the Extra General Meeting, and a proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders.

Says Thomas Eldered, CEO of Recipharm AB, “These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader. We now have a US footprint which we can use to further penetrate the world’s largest pharmaceutical market and the business in Sweden provides us with several opportunities for synergies. When we receive the approval in India, Recipharm’s customers will have access to very cost effective development and manufacturing capabilities able to serve international markets including the US. I am extremely excited about these acquisitions and the benefits they will bring. The current Managing Director, Anurag Bagaria, and VP Corporate Development, Karan Bagaria, will continue in their current positions post closing and I am very much looking forward to working with them.”

Anurag Bagaria, managing director of Kemwell said “I am delighted about the combination of Kemwell’s pharmaceutical business with Recipharm, both of which have many complementary capabilities. I am confident that together we will be even more successful and we look forward to building on our combined strengths.”

PerÅke Oldentoft, chairman of Kemwell AB and managing director of Kemfin commented, “I am really excited about the combination of the companies and I am sure that under the Recipharm umbrella the business will continue to grow and provide high quality products and services to its customers.”

Courtesy – Pharmabiz

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