Private equity's pharma hopes exemplified by Nycomed

If you've ever wondered why private equity investors are such big buyers and sellers in the pharma world, look no further than Nycomed. As Forbes explains, Nordic Capital, a small Swedish firm parlayed $2.6 billion, invested together with Avista Capital Parters into a profit of $10 billion-plus.

Nordic Capital bought into Nycomed first in 1999, then sold out in 2002--only to buy back a 50% stake in 2005. The idea was to amp up sales outside Europe, as it had closer to home during recent years.

Results? Forbes says Nycomed's Russian sales grew to $800 million in 2001, up from $8 million in 1999. And last year, Takeda Pharmaceutical agreed to pay $13.6 billion for Nycomed's ex-U.S. operations. Those, re-dubbed Fougera, sold for $1.5 billion in July.

Of course, not all private equity investors have been so successful in the drug business. Nordic's Kristoffer Melinder told Forbes that his firm's success lies in focusing on operating its companies, rather than on burnishing their financial statements.

Could some recent private-equity buyouts follow in Nordic's pharma footsteps? Cinven recently bought U.K. speciality drugmaker Mercury Pharma, aiming to pump up its sales of cheap generics--perfect for today's cost-cutting environment, the firm figures--and expand geographically through M&A. Meanwhile, BC Partners, which snapped up Germany's Aenova in August, believes it can broaden its portfolio and expand geographically by making deals.

- read the Forbes piece