CDMO Recipharm strikes again with deal for India's Kemwell

(Lyo Summit)

Swedish CDMO Recipharm will get its first U.S. site after pulling off another expansion deal just days after completing its last. This time the contract manufacturer is buying operations in the U.S., Sweden and India from India’s Kemwell.

Recipharm said Monday that it will spend $205 million (SEK 1.7 billion) in a two-stage deal that will expand both its drug development skills and API manufacturing. It has agreed to pay about $85 million for operations in Sweden and the U.S. that will get it Kemwell’s drug development business in Research Triangle Park, NC. That part of the deal is slated to close in Q2 2016, it said.

It also is spending about $120 million to get operations in India that include FDA-approved API manufacturing. That piece is contingent on approval from the Indian government but is expected to close by year-end, Recipharm said in an announcement today.

“These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader,” Recipharm CEO Thomas Eldered said in a statement. “We now have a U.S. footprint which we can use to further penetrate the world’s largest pharmaceutical market.”

It is a small footprint in the U.S, an operation with 50 employees that develops inhalation products, as well as liquid, semi-solid, solid and parenteral products. The North Carolina site also is adding a GMP suite that will provide manufacturing of clinical trial material.

The Swedish business is located in Uppsala and has two production units that manufacture a limited number of products based on the same API and are supplied essentially to one large customer, the company said. There is also a small general pharmaceutical manufacturing unit.

Those operations employ about 210 people, but Recipharm noted in its announcement that the Swedish businesses offer “opportunities for substantial cost savings and operational synergies.” Without specifying whether there would be job cuts tied to these, it calculated that it could save about $3 million a year by the end of 2017. It said, “These cost savings and synergies will be driven by asset rationalization and savings in general within administration activities.”

It said the 2015 sales for the U.S. and Swedish business operations amounted to about $57 million.

In India, Recipharm gets both development and manufacturing operations that employ 1,400 people. Those include a solid-dose manufacturing plant that came online in 2008 that is approved by the FDA, the EU and other regulators. There also is an oral liquids production plant that opened in 2011 that makes products targeted primarily to the Indian market, it said. The Indian operations it is buying had 2015 sales of about $35 million. Recipharm did not buy Kemwell’s biopharma business but does have the right of first refusal if Kemwell decides to sell it.

Just last week, Recipharm closed on another substantial deal in India, buying a 74% stake in India’s Nitin Lifesciences for $102 million. With that, it picked up three manufacturing plants that specialize in small volume production of sterile injectable products.  

- here’s the release