Global private equity firm Warburg Pincus has taken a 58 per cent stake in ProSkelia, the French R&D company that is being spun off from pharmaceutical firm Aventis. Warburg Pincus has paid E60m for its interest, which will provide ProSkelia with funding for three years.
The new company will take over all bone research and development activities of Aventis, and inherits intellectual property as well as an 80-strong workforce. WP is hoping ProSkelia will make inroads into the global osteoparosis market, which is currently worth $5bn and is growing at 16 per cent annually.
Nick Lowcock, managing director at Warburg Pincus said the ProSkelia investment continued the firm’s strategy of linking up with global pharmaceutical companies. “With our investment in ProSkelia, we are getting a stake in a company that is already one of France’s leading biotech companies. The firm’s management team and pipeline of products make ProSkelia a very attractive investment.”
Warburg Pincus is expected to follow a similar strategy with ProSkelia as it has done with previous investments in big pharma spin-outs. In 1999, the firm invested in Eurand, a Milan-based subsidiary of American Home Products (AHP) specialising in drug delivery products. The firm typically looks to raise additional funds for its portfolio companies via initial public offerings, although Lowcock concedes that the current market is less likely to provide IPO opportunities.
Lowcock added that the firm was looking at another spin-off opportunity in the pharmaceutical sector, but that the deal was in its very early stages. The firm is hoping to establish further links with big pharma companies and believes that its experience of organising such deals will put it in a strong position. “I think we are well-positioned as a good partner for global pharmaceutical firms. We have the necessary experience of putting together what can be very complicated deals, whilst creating value and meeting the needs of the parent companies.”
Warburg Pincus looks to invest between 20 and 25 per cent of its funds in healthcare and has invested $1.5bn in the sector over the last three years. Its total commitment to the sector is over $3bn, spanning 100 investments.
Warburg Pincus invested in ProSkelia from two of its global investment funds. Warburg Pincus VIII, which closed at $5.3bn earlier this year provided 50 per cent of the investment, with Warburg Pincus International Partners providing the rest.