Recipharm to pay $60M for Sanofi manufacturing plant
- Swedish drug manufacturer Recipharm will pay Sanofi $60 million to buy a production plant located near Manchester, U.K., inking a deal aimed at growing its contract business in the market for respiratory medicines.
- Some 450 employees currently staffed to Sanofi's Holmes Chapel site will transfer over to Recipharm upon deal closing, which is set to occur by the end of this year.
- Recipharm expects the Holmes Chapel business, which earned Sanofi $67 million in revenue over the last 12 months to March, to be accretive to earnings beginning in the first quarter of 2019. Incorporating Holmes Chapel into Recipharm is expected to grow the company's revenues by about 11% on a pro forma basis.
The deal with Sanofi resembles a prior deal Recipharm inked last year with Roche, in which the contract development and manufacturing organization (CDMO) acquired a production facility from the Swiss pharma while simultaneously entering a long-term supply agreement.
Similarly, Recipharm has agreed to continue manufacturing products for Sanofi that the French pharma currently makes at its Holmes Chapel site, primarily the allergy drug Nasacort (triamcinolone acetonide).
Recipharm will also take over a contract supplying Vectura Group with flutiform, the active ingredient used in some asthma medicines.
The CDMO sees the contract manufacturing market for respiratory drugs as one of growth, and hopes to expand further. Holmes Chapel offers capabilities in metered dose inhalers and nasal sprays, and also houses development areas for dry powder inhalation platforms.
"This business will integrate very well with our inhalation development business that we already have in the U.S.," Recipharma CEO Thomas Eldered said on a June 14 call with analysts.
Financially, the deal is an attractive one. Recipharm will acquire the site for a price roughly 0.9 times revenue over the last twelve months and 5.3 times EBITDA, a measure of earnings.
Recipharm will also take on approximately $5.4 million in net debt held by Holmes Chapel.
If unspecified performance thresholds are met, Recipharm could owe up to another $12 million in 2020 and 2021.
It's not all growth for the CDMO, however. In November, Recipharm announced it would shutter two facilities in its home country of Sweden, laying off 225 employees over the next two years.
- BioPharma Dive Swedish CDMO picks up facility, supply contract in deal with Roche
- BioPharma Dive Recipharm to shutter two plants, cutting 225 jobs
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