Baring seals $670m Japan healthcare buyout

The firm will buy 100% of Bushu Pharmaceuticals from Tokio Marine Capital

Baring Private Equity Asia has agreed to acquire Japanese healthcare business Bushu Pharmaceuticals in a deal worth JPY 77.3 billion ($670 million; €532 million), the largest private equity deal announced in the country’s healthcare sector this year, according to a statement.

The Asia Pacific firm, led by founder Jean Eric Salata, will buy 100 percent of the pharmaceutical contract manufacturing organisation from domestic private equity firm Tokio Marine Capital.

The contract manufacturing sector in Japan has grown rapidly since changes to the pharmaceutical affairs law were made in 2005, enabling the full-scale outsourcing of drug manufacturing – growing at 14 percent each year, according to the firm.  

The sector as a percentage of overall pharmaceutical drug manufacturing in Japan is still underpenetrated compared to the global market (8% versus 18%) and is expected to grow further as multinational drug companies, without their own Japanese manufacturing facilities, increasingly focus on Japan with new drug launches.

Japan’s healthcare sector has caught the attention of private equity buyers recently, with Kohlberg Kravis Roberts closing a $1.6 billion corporate carve-out of Panasonic Healthcare earlier this year, having announced the deal in late 2013.

Salata, who also serves as chief executive of Baring Asia, said, “Bushu has made impressive strides in recent years to become Japan’s CMO market leader and is well positioned to expand through production capacity increases and expansion into new market segments. We look forward to working with the management team under the leadership of Bushu’s president, Takayuki Kasai.”

Baring’s deal comes as the firm continues to make large investments in Asia and globally in business that have expansion potential within the region.

In October, the firm reached its first close on $3.2 billion for its latest private equity fund – the firm’s sixth Asia offering, Private Equity International reported earlier.

One source close to the matter said it is “just a matter of time” until it closes on its $3.85 billion hard cap and expects to be “quite significantly oversubscribed” as a number of LPs were unable to even fulfil their desired allocations to the fund due to high demand.