China's Hepalink goes from U.S. supplier to U.S. buyer with deal to grab SPL

China's Shenzhen Hepalink Pharmaceutical, a publicly traded company that claims to be one of the largest makers of heparin in the world, has ambitions to get bigger and is making a substantial investment in the U.S. to achieve them. It will lay out more than $337 million to buy a U.S.-based competitor from private equity investor American Capital in a bid to get access to new products and more markets.

Hepalink will acquire Waunakee, WI-based Scientific Protein Laboratories (SPL) in a deal it says will run to $337.5 million in cash and other considerations. It gets a company with 204 employees, manufacturing facilities in Waunakee and Sioux City, IA, and a big presence in the heparin market globally. It said the SPL management team will be kept in place.

In announcing the deal, Hepalink CEO Li Li emphasized the two companies' shared concern for meeting stringent FDA standards for heparin production. The FDA got particularly focused on Chinese heparin makers in 2008, when tainted Chinese heparin was implicated in the deaths of dozens of U.S. dialysis patients. The public outcry led the FDA to ban dozens of Chinese heparin makers, to ask drugmakers to take extra steps to test raw heparin, and to develop a whole new attitude toward foreign pharmaceutical oversight.

Hepalink products were not among those identified as being involved in the problem. The company, which already exports to the U.S., pointed out that as a participant in the U.S. Pharmacopeial Convention's Pharmaceutical Ingredient Verification Program, it agrees to additional testing, verification and certification of products to expedite shipments to the U.S.

SPL knows a little something itself about FDA heparin concerns. The API maker in 2011 received an FDA warning letter criticizing it for not promptly investigating a complaint about a lot of its product that a drugmaker said might be contaminated. The company, however, responded to the FDA concerns quickly and received a closeout letter within months.

According to Dow Jones, Hepalink is buying SPL from private equity group American Capital, which bought an 87% stake in the company in 2006 for $135.66 million. American Capital also owns API maker Cambridge Major Laboratories, having paid $212 million last year to buy the Germantown, WI-based company.

- here's the announcement
- read the Dow Jones coverage (sub. req.)

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