Close Brothers backs €137m pharma buyout

Close Brothers Private Equity, a UK mid-market buyout firm, has made its first direct investment in the pharmaceuticals sector with a $176m management buyout of Rosement Pharmaceuticals, a developer of off-patent oral liquid medicines.

Close Brothers Private Equity, a UK mid-market private equity firm, has backed a €137 million ($176m) management buyout of Rosemont Pharmaceuticals, a maker of oral liquid medicines.
 
As part of the purchase from Savient Pharmaceuticals, Kevin James, previously the managing director of Wyeth UK, a pharmaceutical and healthcare business, has joined Rosemont Pharmaceuticals as chairman.
 
Amethyst Corporate Finance advised Close Brothers Private Equity, while management was advised by Park Place Corporate Finance. Citigroup Global Markets advised Savient Pharmaceuticals.
 

Dinnen: first direct pharma investment

Sean Dinnen, partner at London-based Close Brothers Private Equity, said that the Rosement acquisition was made from the firm’s seventh fund, which closed on £360 million in March 2004. The fund is now approximately 40 percent invested.
 
Dinnen said that IDIS, an importer and distributor of unlicensed pharmaceuticals acquired by Close Brothers Private Equity for £22 million in September 2005, had recommended Rosement while the firm was conducting an analysis of the niche pharmaceuticals sector: “We’re not a sector-oriented fund, but we have looked at a number of pharmaceutical opportunities in the past. Rosement is our first purchase of a direct pharmaceutical manufacturer.”
 
Rosemont Pharmaceuticals, based in Leeds, is a specialist in oral medicines for people who have swallowing difficulties, dysphagia. The company develops and manufactures oral liquid formulations of off-patent products, including those of large pharmaceutical brand originators. The business recently received approval from the FDA to distribute its first product in the US.
 
“The vast majority of pharmaceutical products are in capsule form, while oral liquids are a small percentage of the market,” said Dinnen. “What is interesting about Rosemont is that it often markets liquid versions of products that the brand originators don’t as the volumes they sell in are relatively small. For a lot of its products, Rosemont doesn’t have any competition.”
 
The UK oral liquid market is estimated to have brown at 20 percent per annum in the last several years, according to Close Brothers Private Equity. Dinnen said that growth has been driven primarily by an ageing population that has problems with swallowing, a population that is itself predicted to grow in the coming years.