Royal DSM, the global Life Sciences and Materials Sciences company, and JLL Partners, a leading middle-market private equity firm, have created a new company, which will be a leading global contract development and manufacturing organisation (CDMO) for the pharmaceutical industry with anticipated sales of around US$ 2 billion. It will be 51 per cent owned by JLL and 49 per cent by DSM.
The name of the company (provisionally called NewCo) will be announced in the coming months. NewCo will be formed by combining DSM’s business group DSM Pharmaceutical Products (“DPP”) with Patheon Inc. (PTI), after a successful completion of the transaction described below. NewCo will be a leading global contract development and manufacturing organisation with anticipated 2014 sales of about US$ 2 billion (pro-forma) and a strong EBITDA and operational cash flow.
NewCo will have an end-to-end offering from finished dosage (drug products) to active substances (APIs) and a global footprint of 23 locations across North America, Europe, Latin America and Australia with about 8,300 employees.
Combining DPP and Patheon is fully in line with DSM’s strategy for its Pharma cluster as well as an excellent value creation opportunity as DSM and JLL will work together to maximize the value of NewCo. For DSM, combining DPP with Patheon into NewCo is also a key step in the strategic transformation of its pharma activities into partnerships.
Once the transaction is complete, NewCo will add scale and new value chain capabilities/technologies to expand its end-to-end service offering as a comprehensive solution provider to the industry. NewCo will operate as an independent standalone company.
NewCo will have a unique breadth of service offerings with a focus on drug products and APIs with a wide range of technologies and will be able to offer comprehensive end-to-end solutions to a broad spectrum of companies ranging from large pharmaceutical and biotech companies to specialty pharma companies, generics and emerging pharma companies.
The combined company will also be a leader in proprietary softgel formulations for over-the-counter, prescription and nutritional consumer products. The exclusive synthesis products and intermediates are targeted to the crop protection, personal care, and fine chemicals products industries.
Jim Mullen, currently CEO of Patheon, will be appointed CEO of NewCo upon completion of the transaction. Mullen joined Patheon in 2011 as Chief Executive Officer. Prior to joining Patheon, he served as CEO and President at Biogen Idec Inc., one of the world's largest biotechnology companies from 2003 to 2010. He possesses over 30 years of industry experience, ranging from biotechnology and pharmaceuticals to specialty chemicals, as well as extensive expertise in pharmaceutical and biotech manufacturing, engineering, sales, marketing, mergers and acquisitions.
Feike Sijbesma, CEO and chairman of the DSM Managing Board, said: “Fully in line with our strategy, this is for DSM Pharmaceutical Products the perfect way to accelerate growth and for DSM to maximize value for this business. By creating a global top CDMO organization I am convinced that NewCo as a standalone company will be able to create substantial value. With this partnership DSM has made a key step in the strategic transformation of its Pharma activities into partnerships whilst creating maximal value for all stakeholders.”
Paul S Levy, managing director of JLL Partners, chairman of the Board of Patheon shared: “This partnership demonstrates JLL’s commitment to building companies that create value, fill unmet needs and drive excellence within their respective industries. This is the strategic initiative and execution ‘know how’ that stakeholders have come to expect from JLL. NewCo is poised to transform the CDMO industry and we are excited to bring these two entities together.”
Stefan Doboczky, member of the DSM Managing Board and responsible for the Pharma cluster, commented: “Our customers bring life-saving and life-enhancing medicines to people who need them around the world. They will greatly benefit from NewCo’s unmatched depth and breadth of capabilities and services. I am convinced that NewCo will be even better positioned to help customers succeed with their unique needs.”
Patheon is a leading provider of contract development and commercial manufacturing services to the global pharmaceutical industry, with a focus on drug products.