KKR leads $250m pharma round

Jazz Pharmaceuticals snags one of the largest second round financings on record for a speciality pharma company without any commercialized drugs.

New York buyout firm Kohlberg Kravis Roberts has led a $250 million (€206 million) series B financing for specialty pharmaceutical company Jazz Pharmaceuticals.


The second round of funding dwarfs Jazz’s previous $15 million series A financing completed in April 2003. Returning investors Prospect Venture Partners and Versant Ventures were joined by newcomers that included Beecken Peety O’Keefe & Co., Golden Gate Capital and Thoma Cressey Equity Partners.


Jazz focuses on developing and commercializing drugs for treating neurological and psychiatric disorders, and according to a press statement, is “aggressively adding to its pharmaceutical product portfolio through licensing, acquisitions and collaborations.” The year-old company currently has no products out on the markets.


Jazz’s funding is raising eyebrows because many in the venture capital industry are debating whether too much money is flowing into these types of pharmaceutical companies, which license and commercialize products rather than following through with their own drug discovery processes. These types of drug companies are popular because they promise a quicker rate of return, though many experts say the sector is becoming oversaturated with players.


In December, Reliant Pharmaceuticals, which markets its products to primary care physicians, garnered $252 million in funds. However, this was already the fourth financing round for the company, founded in 1999.


KKR made headlines earlier this month when it agreed to buy mattress manufacturer Sealy from a private equity consortium including Bain Capital, Charlesbank Capital Partners, JP Morgan Partners, CIBC Argosy Merchant Fund and BancBoston Capital, for $1.5 billion.