Cambrex acquires Avista in $250M deal
- New Jersey-based Cambrex is acquiring Avista Pharma Solutions in a further step to solidify its place as a leading contract development and manufacturing organization (CDMO).
- The deal adds Avista's early-stage drug development and manufacturing capabilities, along with analytical and testing provisions, to Cambrex's existing active pharmaceutical ingredient and finished dosage form services.
- Avista also brings on board four facilities — three in the U.S. and one in the U.K. — and 300 staff as part of the $252 million deal. Cambrex expects the deal "to be accretive to adjusted earnings per share in 2019," according to a Tuesday statement.
By acquiring Avista from the healthcare-focused private equity firm Ampersand Capital Partners, Cambrex has furthered the recent trend of consolidation among CDMOs.
Over the last two years, Evotec bought early- to mid-stage development company Aptuit; Thermo Fisher Scientific bagged Patheon for $7.2 billion; and Catalent picked up Juniper Pharmaceuticals, to name a few.
Cambrex's acquisition gives it access to new customers as well as an additional income stream. Avista has more than 400 clients on its books and expects to fetch $65 million in revenue in 2018.
Looming challenges for pharmaceutical companies are helping drive the consolidation seen across the CDMO space.
Pharmas and biotechs are developing increasingly complex drugs like biologics and targeted therapies. Yet producing those medicines is an expensive task, in turn nudging the companies to outsource the work to contract research organizations that can better deal with later-stage trials, or to contract manufacturer organizations that can scale up production.
Consolidation has helped CDMOs meet this growing demand as well as offer the kind of comprehensive services drugmakers often seek.
Cambrex, for instance, also acquired CDMO Halo Pharma in July through a $425 million deal. Together with the Avista buy, the two deals fit into Cambrex's larger strategy "to diversify its revenue base away from its largest customer in Gilead," and expand its large commercial product opportunities, according to Jefferies analyst David Windley.
"Avista fills this role neatly by enabling [Cambrex] to stretch into the preclinical gap between patent and first-in-human studies, capturing clients with pipeline candidates before they enter clinical trials," Windley wrote in a Nov. 20 investor note, adding that around half of Avista's customer base provide cross-selling opportunities for Cambrex and Halo's services.
- BioPharma Dive Consolidation in the CRO space a plus for biopharma
Follow Suzanne Elvidge on Twitter