Catalent signaled a year ago that it was looking for the right M&A target to bulk up like some of its competitors have.
Now it says it has found one, having agreed to pay $950 million to buy Cook Pharmica and its extensive biologics manufacturing operation in Bloomington, Indiana.
Somerset, New Jersey-based Catalent announced it will pay $750 million to privately-held Cook Group on closing and the rest in $50 million installments over the next four years, to get Cook’s 875,000 square foot development and manufacturing facility. It will also take on its 750 employees, including its executive team. The Cook CDMO business had revenues of $179 million last year.
“We are very excited to join forces with the talented Cook Pharmica team in Bloomington, Indiana and plan to invest aggressively there, in our rapidly expanding Madison, Wisconsin facility, and in the rest of the Catalent Biologics network….” Catalent CEO John Chiminski said in a statement.
The Cook operation, which was founded in 2004, has capabilities in sterile formulation and fill/finish across liquid and lyophilized vials, prefilled syringes, and cartridges, Catalent said.
During a call with investors, CFO Matt Walsh said that Cooks capabilities integrate well with Catalent’s expertise in cell line engineering, bioconjugate development and other services. It provides both drug substance and drug product production under one roof, which Catalent executives said they see as a benefit.
Catalent, which has been building up its biologics, currently offers fill-finish services in Brussels, Belgium and Limoges, France, and conjugation technology in Emeryville, California. It has a biologics development and biomanufacturing facility in Madison in which it currently is investing about $35 million in single-use bioreactor capacity that it expects to be online in November.
Walsh said the Cook facility is currently running at about 40% capacity so has lots of room for organic growth. He said about half of the plant’s footprint is available for expansion, which he said was a real benefit of the deal, “so we can grow there without substantial investment in the near term but might choose to do that.”
While Catalent execs would not provide details, Mike Riley, VP for Catalent biologics, said in a phone interview that the company is looking at expansion at both facilities.
“We see significant growth potential in drug substance and on the drug product side. This deal brings in some great infrastructure and we see opportunity to expand across all our facilities,” Riley said.
But others see the same opportunities. Catalent joins a host of other CDMO players that have been turning to substantial M&A deals to build capacity and capability. Last month, Thermo Fisher Scientific completed its $7.2 billion acquisition of CDMO Patheon. That came just weeks after Lonza completed its $5.5 billion buyout of capsule maker Capsugel.
But it is in the rapidly growing biologics area where much of the action has been taking place, with a number of companies, like South Korea’s Celltrion and Samsung, focused primarily in that area. Small players are growing in the biologics manufacturing arena as well. Last month, China’s 3SBio, as part of a joint venture with CPE Funds, agreed to buy Canadian CDMO Therapure Biomanufacturing for $290 million.
By Eric Palmer
Source: Fierce Pharma
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