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19 Nov 2019

Is Recipharm on the cusp of becoming a leading inhalation company?

The CDMO offers to acquire Consort Medical to become a Top Five global CDMO player.

Recipharm and Consort Medical have reached an agreement on the terms of a recommended cash offer by Recipharm Holdings Limited, a wholly-owned direct subsidiary of Recipharm, for Consort, a leading global drug delivery and device company and integrated CDMO. The Board of Consort has confirmed its unanimous intention to recommend a cash offer for an equity value of £505 million (approximately SEK 6,284 million0.

Recipharm’s aim is to become a leading global CDMO and it is successfully executing against its ambitious growth strategy, targeting annual sales of over SEK 8 billion by 2020. This target has been set amid consolidation in the fragmented CDMO industry, as pharmaceutical companies seek to reduce their fixed costs by rationalising supply chains and focusing on core R&D and sales capabilities. Consequently, they are turning to trusted partners with the necessary scale and breadth of technologies to support them through the drug development process and the subsequent commercial manufacturing and supply.

Given these sector dynamics, and Consort’s strength in pharmaceutical device development and manufacturing, Recipharm believes that the combination is an excellent match. Recipharm has been an admirer of Consort’s innovative delivery technologies, which are highly complementary to Recipharm’s capabilities in the development and commercial supply of both inhaled and sterile injectable finished dose forms. The Aesica division provides expansion through additional capabilities and access to new customers. The combination of Consort’s product portfolio and services with Recipharm’s existing business will allow the enlarged organisation to become a best-in-class technology-based CDMO, positioning it to compete more effectively within a wider part of the value chain.

Commenting on the transaction, Thomas Eldered, CEO of Recipharm, said: “I am excited at the prospect of combining Recipharm with Consort, which is extremely complementary. In our view, Bespak is already acknowledged as a leading drug device developer and manufacturer and is a perfect fit for Recipharm’s broader pharmaceutical capabilities. The enlarged group will be able to provide finished dose forms in Bespak’s key technologies and provide customers with a far more integrated approach. The Aesica business will further expand our capabilities and capacities in both API and finished dose manufacturing whilst providing access to a new customer base”.

Commenting on the transaction, Christopher Brinsmead CBE, Chairman of the Board of Consort, said: “Consort’s leading technologies and market positions provide innovative solutions and products to a blue-chip customer base. We believe that Recipharm’s businesses are highly complementary to our own and the Board intends to unanimously recommend the offer from Recipharm which represents a 39% premium to our share price”.

Jonathan Glenn, CEO, of Consort added: “Consort’s strategy has been to focus on expanding its businesses into new markets and geographic territories, and on developing our combined drug/device offering. Recipharm’s capabilities and footprint in drug manufacturing will enhance both our Bespak and Aesica businesses. We believe that customers of both businesses will value the offering and enhanced scale of the combined business”.

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