Patheon nabs Mexican beachhead with $255M Banner buyout

Everyone who's anyone is growing in emerging markets these days. And contract drugmaker Patheon won't be left out. The company is buying Mexico's gelatin capsules-and-coatings company Banner Pharmacaps for $255 million, not only for the drug delivery technology, but for broader access to the Latin American market.

The way Patheon sees it, the deal puts it in the middle of Banner's customer network in the private-label drug business. "(Banner) expands our geographic presence," CEO James Mullen told Reuters. "It gives us ... a direct-to-market business in Mexico and some of the other Latin American countries."

Like other drugmakers, Patheon figures that South America and other fast-growing emerging markets offer more opportunity than stagnant North America and Europe. Drugmakers from Big Pharma to much smaller have been striking partnership deals--and buying up drugmakers and consumer health companies--to capture a share of that growth. "We are certainly interested in India and China as well," said Mullen, who came to Patheon after running the Boston-based biotech Biogen Idec ($BIIB).

Beyond the emerging-markets boost, Banner adds its gel technology to Patheon's quiver of capabilities. And softgel formulations like Banner's are popular these days. "We believe that Banner's complementary, specialized technology capability should be a credit to Patheon," TD Securities analyst Lennox Gibbs told Reuters.

Mullen, for his part, expects the Banner deal to push his company past the $1 billion mark, another aid to attracting new customers. "We believe our visibility within the industry will be further strengthened as we pass the USD 1 billion-revenue mark," he said in a statement.

- see the release from Patheon
- get more from Reuters

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