Warburg Pincus plunks down $195M for JHP

Private equity investor sees upside in sterile injectable drugs
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Private equity investor Warburg Pincus doesn't buy something unless it sees a lot of upside and so it says something when it decides to pay a couple hundred million dollars to buy a sterile injectables contract manufacturer and specialty drug company from a private investment banker.

Warburg Pincus said Monday that it would pay $195 million to buy JHP Pharmaceuticals, the majority of which is owned by Morgan Stanley Principal Investments. JHP management maintained an ownership position but further details of the deal were not offered up.

JHP was founded in 2007 to mine the $30 billion U.S. sterile injectable drug market. Much of that work has been for clients but the company also has a pipeline of generic injectable drugs. "In 2013, we will launch the first products from our strong pipeline of generic products," said CEO and co-founder Stuart Hinchen. And with Warburg's deep pockets to back it up, JHP co-founder Peter Jenkins says that pipeline will get "more expansive." The company has a 171,000-square-foot plant in Rochester, MI, and about 370 employees in manufacturing, development and sales.

The U.S. sterile injectables market has been in some flux and looks to be even more so. Leader Hospira ($HSP) continues to work out manufacturing concerns of the FDA, which found significant problems with three of its plants. That has hatched opportunities for others, like Fresenius Kabi. Its German parent several times upped its earnings forecasts for 2012 to reflect additional business it was picking up due to competitors' problems. Jordan-based Hikma also saw growth as demand grew for products that Hospira was not producing. But Hospira is investing more than $375 million to resolve issues at the three plants. Once done, those facilities will be significantly upgraded, and ostensibly more efficient, injecting yet another factor into the U.S. market.

- here's the release

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