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Behind AmerisourceBergen's PharmaLex buy

Sep 14, 2022
Illustration of a pill, half of which is dollar bills

Illustration: Rebecca Zisser/Axios

AmerisourceBergen won the auction for Germany-based PharmaLex, announcing its $1.29 billion all-cash acquisition of the pharma services company from AUCTUS Capital Partners earlier this week, Sarah writes.

Why it matters: The deal is further evidence that cash-rich strategics are well-positioned as buyers for big-ticket health care assets in today's volatile financing environment. (The credit markets are even tighter in Europe.)

Catch up fast: Germany's Auctus earlier this year engaged Harris Williams for financial advice on a potential sale, Axios wrote in April. Evercore advised AmerisourceBergen, per Monday's announcement.

Behind the scenes: AmerisourceBergen came out on top after prospective private equity suitors — including Blackrock and Blackstone — ultimately dropped, sources told Axios.

  • AmerisourceBergen has been increasingly aggressive in its pursuit of pharma services assets, one source says: "They have been sporadically but very engaged on four or five [situations]."
  • The company has chased assets in the past such as Real Chemistry (then W2O Group), which went to New Mountain Capital in 2019, and Giant Creative Strategy, which went to Huntsworth in mid-2018, the source says.
  • Another source adds that AmerisourceBergen looked at RevHealth, which went to WindRose Health Investors in July.

Be smart: AmerisourceBergen, one of the world's largest pharmaceutical distributors, has been trying to find ways to get closer to pharma manufacturers with value-added pharma services offerings.

  • It already plays in commercialization and packaging — and PharmaLex gives it the regulatory focus that it was missing.

By the numbers: PharmaLex’s LTM EBITDA was pegged in the mid-60 million euro range in April, whereas forward EBITDA is about 70 million euros.

  • Applying those figures implies a multiple in the 18-20x range.

Yes, but: Volatile financing market notwithstanding, sponsors also hesitated to move forward on PharmaLex due to questions around platform integration, sources say.

  • PharmaLex has grown rapidly via M&A under Auctus, having inked at least 23 acquisitions since October 2015, by PitchBook's count. (Though sources say its add-on count is even higher.)
  • "Even if you've done five [acquisitions]" it's extremely challenging, one source notes.

How it works: PharmaLex's global team of scientific, regulatory, and safety and compliance (GxP) experts provide strategic guidance and regulatory support to biopharma companies throughout a product’s lifecycle.

Flashback: Baird was previously mandated in 2018 for a potential sale, but the company ultimately did not come to market, sources said.

State of play: Private equity investors have rushed into the pharma commercialization, regulatory compliance and medical affairs areas the last two years, one recent such example being...

👀 What we're watching: Whether other well-capitalized strategics like McKesson (which has been public about its interest in oncology) eventually go after a larger pharma services asset.

Blackstone and Blackrock declined to comment, while Auctus and AmerisourceBergen did not immediately return requests for comment.

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