WSJ: Novartis looks to unload CMO LTS Lohmann

Contract manufacturing has become a hot investment, and Novartis thinks it may be time to cash in. The Swiss drugmaker and its partners are looking at selling their joint venture, LTS Lohmann.

According to The Wall Street Journal, the Swiss drugmaker owns LTS Lohmann with German billionaire Dietmar Hopp and German holding company BWK. It is estimated that the operation could bring between €1 billion ($1.3 billion) and €1.4 billion ($1.83 billion). The company specializes in products like nicotine patches and patches for treating angina, as well as wafer products. Its prestigious client list includes Johnson & Johnson ($JNJ), Roche ($RHHBY) and Pfizer ($PFE), as well as Novartis ($NVS), of course.

Citing sources, the newspaper says the company is seeing what interest there might be among private-equity players like EQT, CVC Capital Partners Ltd., Bridgepoint Capital Ltd. and BC Partners. No one commented on the report.

Contract manufacturing is a growing piece of the industry as drugmakers turn to outside operators to keep a lid on their own manufacturing investments and costs. Private investors like its growth potential. Last year BC Partners paid €500 million-plus (about $620 million) for Germany's Aenova Group from Bridgepoint. Also, generics maker Par Pharmaceutical ($PRX) agreed to a $1.9 billion buyout by private equity investor TPG. The Carlyle Group ($CG) cashed out of one investment last year, selling its Qualicaps capsule business to Mitsubishi for about $650 million. Large contract manufacturing players in the industry, like Patheon and Lonza, have been expanding their operations.

- read the Wall Street Journal story (sub. req.)