By Amy Or
MIDDLESEX, N.J.--After nine years of ownership, RoundTable
Healthcare Partners intends to part ways with CorePharma LLC in a
deal that could value the generic drug maker for at least $1
billion, said a person familiar with the situation.
Lake Forest, Ill.-based RoundTable has hired Credit Suisse Group
to handle the auction process, the person said.
Middlesex, N.J.-based CorePharma makes and markets
pharmaceutical products that are difficult to develop, either
because of the dosage form--extended release versus immediate
release--or because they involve controlled drugs.
Founded in 1998, the company states on its website it has
products across a variety of dosage forms and therapeutic
categories and that it produces nearly half a billion tablets and
capsules annually. RoundTable acquired a majority stake in
CorePharma in 2005, while the company's management retained a
"substantial ownership," according to a news release issued at the
time. The capital came out of RoundTable's second fund, which
closed with $500 million in March 2005.
Although the medical community has focused its attention on the
development of new drugs that may be personalized to the individual
patient's genome to bolster a treatment's effectiveness, private
equity investors have their eyes on established, branded drugs and
their generic equivalents.
Several big pharmaceutical companies are either holding or
considering sales of portfolio of older drugs for billions of
dollars so they can focus on a pipeline of new discoveries. French
company Sanofi SA, for example, has hired Goldman Sachs Group Inc.
and Evercore to run a sale process on the portfolio of drugs that
generated 2 billion euros in annual sales and 900 million euros in
operating profit, said the person familiar with the situation.
Both Goldman and Evercore declined to comment.
The Wall Street Journal, citing people familiar with the
situation, said private equity firms TPG Capital and Warburg Pincus
as well as Mylan Inc. have had discussions with Sanofi.
Generic drug makers aren't saddled with the burden of research
and development costs and therefore enjoy a decent return by
producing medications whose patents have expired.
Consulting firm McKinsey & Co. said in a May 2013 report
that the generics industry's net revenue grew at an average of 8% a
year between 2009 and 2012, or one-and-a-half times faster than the
5% posted by small-molecule originators. Generic drug makers also
had an average earnings before interest, taxes, depreciation and
amortization of 20%, the firm said.
Warburg in January posted a three-times return from JHP Group
Holdings Inc. by selling the specialty pharmaceutical company to
TPG-backed Par Pharmaceutical Cos over a short span of 13 months.
JHP specializes in sterile, injectable products.
Although backed by RoundTable for nine years, CorePharma isn't
the oldest investment in the firm's current portfolio. The health
care-focused firm acquired a majority stake in Excelsior Medical
Corp. in 2004. The Neptune, N.J., company makes prefilled flush
syringe infusion pumps and syringe pump products.
Write to Amy Or at amy.or@wsj.com
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