Deals continue to happen in the contract manufacturing space and private equity keeps showing up on both sides of the equation. In a deal valued at more than $660 million, Baring Private Equity Asia showed up Monday as the buyer of a Japanese CMO and Tokio Marine Capital as the seller.
Baring will pay ¥77.3 billion ($668 million) to get Bushu Pharmaceuticals, which it termed the largest contract manufacturer in Japan. It also said it was the largest M&A deal by a private equity buyer so far this year in Japan's healthcare sector.
Bushu has two manufacturing plants, one in Kawagoe and one in Misato. Bushu bought the 58,316-square-meter (627,708-square-foot) Misato plant in February from Japanese drugmaker Eisai, a move that brought its annual production to 10 million tablet doses a year. That deal also gave it the ability to do injectables, according to a statement from Baring Asia.
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| Jean Salata, Baring Asia CEO |
"Bushu has made impressive strides in recent years to become Japan's CMO market leader and is well positioned to expand through production capacity increases and expansion into new market segments," Baring Asia CEO Jean Salata said in a release.
There have been a number of CMO deals of late involving private equity players. The largest was this year when private investment firm JLL Partners orchestrated the $2.6 billion merger of its Canadian contract manufacturer Patheon ($PTI) with the Netherlands-based DSM Pharmaceutical Products, into a company now called DPx. DPx has continued its expansion with a deal announced in August to buy biologics contract manufacturer Gallus BioPharmaceuticals, which it is picking up from Ridgemont Equity Partners for an undisclosed sum.
Baring thinks Japan is particularly well positioned for growth in contract manufacturing. Baring said there has been 14% annual average growth in the contract manufacturing market in Japan since 2005 when a new law made it easier for drugmakers there to outsource manufacturing. The private equity firm expects more growth, given that only about 8% of drug manufacturing in Japan is done by CMOs, compared with 18% globally. It said CMOs also should benefit from foreign drugmakers looking to tap into Japan's expanding pharma market.
- read the release
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