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September 19, 2017

Catalent to Acquire Cook Pharmica for $950M

  • Catalent said today it agreed to acquire Cook Pharmica for $950 million in a deal that would continue the consolidation of contract development and manufacturing organizations (CDMOs), to which biopharmas have increasingly outsourced operations, and bolster the buyer’s biologics capabilities.

    The acquisition would join Cook Pharmica’s drug substance and drug product manufacturing and related services with Catalent’s development, delivery, and supply operations—creating a combined company that, the buyer says, would strengthen its position in biologics development and analytical services, manufacturing, and finished product supply.

    The deal further advances global consolidation of the CDMO market, which has seen the closing of two multibillion-dollar transactions this year. One was Thermo Fisher Scientific’s approximately $7.2 billion acquisition of Parexel, which was announced May 15 and completed August 29. The other was Lonza’s $5.5 billion cash purchase of Capsugel, a drug capsule and delivery systems firm, from its private equity owner KKR, announced in December 2016 and completed July 6.

    Also among 2017 CDMO deals, affiliates of The Carlyle Group and GTCR on August 31 completed their acquisition of Albany Molecular Research (AMRI) for about $922 million cash, while JSR Life Sciences in June agreed to acquire for an undisclosed price mammalian cell-line development specialist Selexis and integrate it with KBI Biopharma, which Japan-based JSR acquired in 2015.

    Headquartered in Bloomington, IN, Cook Pharmica was founded in 2004 as a division of the Cook Group. Cook Pharmica has since grown to offer biologics development, clinical and commercial cell culture manufacturing, formulation, finished-dose manufacturing, and packaging services at its 875,000-square-foot development and manufacturing facility in Bloomington, IN.

    Catalent says the Bloomington facility’s biomanufacturing capacity and expertise in sterile formulation and fill/finish across liquid and lyophilized vials, prefilled syringes, and cartridges “perfectly augments” its expertise in cell line engineering, bioconjugate development, analytical services, biomanufacturing, prefilled syringe, and blow/fill/seal technologies.

  • $179M in FY 2017 Revenue

    Privately held Cook Pharmica generated $179 million in revenue in the year ending June 30. For the fiscal year ending June 30, Catalent reported $109.8 million in net earnings, down 1% from the previous fiscal year, on revenue of $2.075 billion, up 12% from FY 2016. All three of Catalent’s reporting segments—softgel technologies, drug delivery solutions, and clinical supply services— finished FY 2017 with double-digit constant-currency revenue growth.

    Catalent has agreed to pay $750 million at the closing of the transaction, and the remaining $200 million in equal installments, without interest, on each of the next four anniversaries of the closing. Catalent expects to finance its all-cash purchase of Cook Medica with new unsecured notes and equity.

    In the first full fiscal year following completion, Catalent said, the deal is expected to add to its adjusted net income per share, which excludes amortization, acquisition expenses, restructuring costs, and other items. The company’s adjusted net income in FY 2017 rose 21% from the previous fiscal year, to $185.6 million.

    The deal is expected to be completed in the fourth quarter, subject to customary closing conditions that include approval from regulators. Once that occurs, Cook Pharmica’s more than 750 employees would join Catalent’s workforce of more than 10,000 people based at 30-plus sites across five continents.

    Those sites include a biologics development and biomanufacturing facility in Madison, WI; fill-finish services in Brussels and Limoges, France; SMARTag conjugation technology in Emeryville, CA; and a network of biologics analytical locations.

    “The complementary biologics development, biomanufacturing, and fill-finish capabilities of Catalent and Cook Pharmica will provide biopharmaceutical firms with a single, integrated partner supporting a wide range of clinical and commercial needs,” Catalent chair and CEO John Chiminski said in a statement.

    “We are very excited to join forces with the talented Cook Pharmica team in Bloomington, IN, and plan to invest aggressively there, in our rapidly expanding Madison, WI, facility, and in the rest of the Catalent Biologics network to build a true global leader in the biologics market, which will help us to improve the lives of patients around the world," Chiminski added.

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