Tag Archives: Pharmaceutical

Hot Life Science Investor Mandate 3: Private Equity Fund Targets Contract Organizations for 2013 – March 14, 2013

12 Mar

A private equity fund based in the Eastern US has around $200 million in total assets under management, has raised three funds, and is currently allocating capital from its third fund to new investment opportunities. They are currently looking for new opportunities in the life science space, and anticipate on investing in 4-6 firms in 2013. The firm typically writes equity checks ranging from $15-50 million.

The PE fund is currently most interested in firms within the biotech R&D space. Specifically, they are looking for contract research organizations (CROs) and contract manufacturing organizations (CMOs). The firm also invests in the medical device space, but prefers firms that are manufacturing low-technology products. The firm is agnostic in terms of where the firm is based, however the majority of the firm’s current portfolio companies are based in the US.

The firm engages in leveraged buyouts, recapitalizations, and growth financing. Typically, they work with companies whose enterprise value ranges from $25 to $300 million, and are looking for firms that have at least $5 million in EBITDA. However, the PEG has been involved in co-investment tractions with enterprise values exceeding $1 billion. With that being said, they will only consider medical device companies that have products that are on the market, and would not consider a pre-revenue medtech firm. The firm invests in both public and private companies.

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Hot Life Science Investor Mandate 1: Mezzanine Debt Fund Focused on Intellectual Property Investments – March 7, 2013

6 Mar

A mezzanine debt fund with offices in the United States is focused on structured financings of commercialized biopharmaceutical products and medical technologies. The firm’s total AUM is approximately $400 Million. They have collectively completed more than 50 royalty transactions representing more than $3 billion in capital over the past 15 years.

The fund is heavily invested in healthcare investing that focuses on intellectual property investments in FDA-approved biopharmaceutical assets through royalty bonds, structured debt, revenue interests and traditional royalty monetization. The firm targets investments between $20 and $200 million, and work directly with leading healthcare companies and research institutions.

Typical financings are intended to healthcare organizations fund pipeline development, make acquisitions, and expand into new markets—all with an adaptable source of capital. The firm’s primary source of collateral is derived from commercialized products.

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Emerging Trends in the CMO World

22 Jan

By Alejandro Zamorano, VP of Business Development, LSN

Competition among the CMO world is at an all-time high. With one of the largest electronic providers in the world recently announcing that it would be spending an additional $2b to expand its operation in Seoul, some are left wondering when the arms race will stop.

Since 2004, CMO’s have seen strong growth as the industry has shifted to contract organizations to complete non-core functions. Despite the recession and a dwindling amount of investment in the biotech field in recent years, CMO’s have remained resilient. The CMO space is a crucial component in the biotech world today, and below are four emerging trends that will bear fruit in 2013:

  • Patent expiry of blockbuster drugs will force the industry to become increasingly price-competitive. Because of this, CMO’s will see lower margins, but higher volume, as manufactures increase production capacity to build economies of scale. [1]
  • Big pharma will continue to outsource non-core functions as they become leaner organizations. In the next couple of years, big pharma will begin to form strategic partnerships with CMO’s and CRO’s as they become increasingly reliant on their services. [1]
  • The CMO industry will see strong growth in emerging markets where skilled labor is considerably lower. China and India will see the strongest growth in the space for the next five years. [1]
  • The CMO space will see vertical consolidation as major players try to increase service offering. The next generation of “CMOs” will also specialize in drug discovery, toxicology, clinical research & development, and manufacturing.

The CMO industry is expected to grow at an annualized rate of 12.5% for the next three years, making the industry worth around $40b by 2015. Despite the optimism, the CMO industry is starting to suffer from increased competition and lower margins. The next generation of CMO’s will need to grow quickly and leverage their relationship with their existing customers in order to maintain a competitive edge. [2]

 

[1] Downey, William. “Bio-CMO Industry Trends – Contract Pharma.” Pharmaceutical and Biopharmaceutical Contract Servicing & Outsourcing – Contract Pharma. N.p., n.d. Web. 21 Jan. 2013. <http://www.contractpharma.com/issues/2012-05/view_features/bio-cmo-industry-trends/&gt;.

[2] Auerbach, Mike. “Contract Manufacturing Trends.” Pharmaceutical Processing. N.p., n.d. Web. 21 Jan. 2013. <http://www.pharmpro.com/articles/2011/02/business-Contract-Manufacturing-Trends/&gt;.

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