Sun Capital Partners’ European branch has agreed to buy the UK’s NextPharma Technologies in its debut deal in the pharmaceuticals space.
All parties are remaining tight-lipped over the deal size, although Sun typically invests in companies with turnovers of €30m to €3bn.
An outsourcing company, NextPharma’s services include contract manufacturing, product development, clinical trials and logistics services to the pharmaceutical and biotech industries.
“We are the first pharmaceutical investment for Sun Capital and we’re very pleased that they’ve chosen us. It demonstrates that they believe in the model whereby drug development, manufacturing and packaging are being outsourced,” said NextPharma chief executive officer Bill Wedlake.
NextPharma was formed in 2000 by Global Healthcare Partners, which was working with DLJ Merchant Banking at the time.
The fresh capital will be used to grow the company organically and most likely for buying up other contract manufacturers in the pharma space, said Wedlake.
It is not just the drug development sector that is using third parties – private equity firms are keen to identify industries that can benefit the most from the increased productivity and cost-efficiency that outsourcers can deliver.
“For a lot of existing products margins are being squeezed, healthcare costs are under pressure from governments all over the world, so drug companies are looking at the efficiency of their manufacturing,” added Wedlake.