Contract drugmaker AMRI ($AMRI) paid $174 million for a Spanish manufacturing operation, part of the company's long-term plan to dial up its focus on production.
Under the deal, the New York-headquartered AMRI acquired Gadea Pharmaceutical, a private company focused on manufacturing complex active ingredients for pharma companies. AMRI is handing over $43.8 million of its own stock in the agreement, paying the difference in cash to pick up the Valladolid-based company.
The buyout fits in with AMRI's longitudinal strategy of investing in large-scale manufacturing in response to client demand. The company has gradually watched its drug discovery and royalty revenues erode over the past two years, and management has repeatedly looked to contract manufacturing to make up the difference. In the year leading up to its Gadea deal, AMRI spent $211 million in three agreements that brought in facilities around the world, part of the company's effort to create a network of production outposts.
And adding Gadea to the fold further extends that mission, AMRI said. The company cleared revenue of about $83 million last year, and AMRI believes it can bring in as much as $90 million in 2015, immediately making a mark on earnings.
|AMRI CEO William Marth|
"The acquisition of Gadea marks another milestone in our company's path towards becoming the preeminent supplier of custom and complex drug development services and product to both the branded and generic pharmaceutical industry," AMRI CEO William Marth said in a statement. "This mutually beneficial transaction presents an exciting opportunity for our two companies that builds upon our growth, adding a strong portfolio of complex API that will augment our existing capabilities and services, and new customer relationships that will extend our global reach."
Meanwhile, in keeping with its deeper focus on manufacturing, AMRI is consolidating much of its work in drug R&D. Over the past year, the company has shuttered development sites around the country and pooled much of its capacity at a site in Buffalo.
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