Please login to the form below

Not currently logged in

DSM merges pharma unit with Patheon

New company will provide portfolio of development and manufacturing services
Royal DSM

Royal DSM has reached a deal to spin off its pharmaceutical business and merge it with contract development and manufacturing organisation (CDMO) Patheon to create a $2.6bn outsourcing giant.

In the convoluted deal, DSM Pharmaceutical Products (DPP) - which sells pharma ingredients as well as providing contract manufacturing services - will be sold to private equity group JLL, the majority investor in Patheon after beating out Lonza in a bidding war in 2009.

Chemical and nutritional product specialist DSM will end up with a 49 per cent stake in the new unnamed entity, which will acquire Patheon for around $1.95bn including debt, with DPP valued at around $670m under the terms of the deal.

The merged company will have 2014 sales of around $2bn, a headcount of around 8,300, and will be led by Patheon's current chief executive James Mullen. The board of directors will consist of Mullen plus five seats for JLL and three seats for DSM.

It will be able to provide an "end-to-end" portfolio of development and manufacturing services from active ingredients to finished drug products, said DSM chief financial officer Rolf-Dieter Schwalb on a conference call yesterday.

DPP currently provides actives, intermediates and finished drug products - including biologics, sterile injectables and high-potency compounds - from 10 locations around the world, and recorded net sales of €543m in 2012.

Meanwhile, Patheon has 13 locations around the world and focuses on solid and sterile finished dosage forms, recently adding softgel capsules to its range with the $255m acquisition of Banner Pharmacaps. It also offers early- and late-development services and posted sales of $943m in the 12 months ended July 31, 2013.

The combined company will address a combined CDMO market for outsourced APIs and finished dosage forms of around $30bn and growing in the mid- to high-single digits, according to DSM.

Around 30 per cent of sales will come from manufacturing of APIs, 35 per cent from producing finished doses, 15 per cent from development services and 10 per cent from softgels.

Subject to approvals by shareholders and antitrust authorities the deal is expected to close in early 2014.

The deal comes at a time when a wave of consolidation is expected in the CMO sector, which has suffered along with its pharma customers in recent years as generic competition to key brands and national austerity measures took their toll.

A recent report from Visiongain found that the top five CMOs in developed markets posted annualised revenue growth of less than one per cent between 2008 and 2012. That pressure is thought to be driving alliances between outsourcing companies as they try to provide the breadth of services that allow strategic-level contracts with big pharma customers.

Article by
Phil Taylor

20th November 2013

From: Sales



Featured jobs

Subscribe to our email news alerts


Add my company
Kendle Healthcare

Company founder Neil Kendle was a pioneer in opinion leader engagement. In 2003, Neil brought together a small, dedicated team...

Latest intelligence

Why tugging at our heartstrings is no longer enough to make us open our purses
Charlotte Shyllon (Director and Partner) and Maren Thurow (Senior Account Executive), discuss the highly emotive Make a Child Cry campaign video from Doctors of the World (Médecins du Monde)....
Exploring full potential of e-detailing data
Today’s high quality e-detailing data can create better quality conversations with healthcare professionals and result in improved access and relationships....
Understanding the "Big Picture"
In this article, Nic Talbot-Watt, Director of Analysis and Forecasting at Black Swan Analysis, highlights the advantage of having a robust commercial understanding of their healthcare innovation early in the...