AMRI's paying $110M for a bolt-on CMO

Former Teva exec William Marth is the new CEO of AMRI
AMRI CEO William Marth

In the midst of an ongoing reorganization, contract drug developer AMRI ($AMRI) has made another buy in manufacturing, signing a deal to scoop up CMO OsoBio for $110 million in cash.

Buying the Albuquerque, NM, service provider will give AMRI expanded capabilities in small-molecule and biologics manufacturing, the company said, and OsoBio's projected $58 million to $60 million in 2014 revenue will help pay off right away. The deal, expected to close next quarter, will also provide about $3 million in cost synergies with in a year, AMRI said.

The deal comes on the heels of AMRI's $41 million buyout of contract manufacturer Cedarburg Pharmaceuticals, part of an effort to bolster large-scale manufacturing, its fastest-growing business.

For AMRI, a contractor in transition, the move supports a renewed focus on manufacturing as it moves away from its old reliance on royalties. After posting a string of quarterly losses as it realigned its business, AMRI has since soared on high demand for its large-scale manufacturing services, and the OsoBio buyout should only advance those gains, CEO William Marth said.

"The acquisition of OsoBio is highly complementary to our finished dose manufacturing business, and is consistent with our strategy to be the preeminent supplier of custom and complex drug development services and products to the pharmaceutical industry," Marth said in a statement. "OsoBio adds significantly to our sterile manufacturing capabilities, extending our industry-leading position in early-stage contract manufacturing to now include OsoBio's pre-eminent large-scale commercial production."

The deeper dive into manufacturing is part of AMRI's efforts to wean itself off royalty revenue, tied largely to Sanofi's ($SNY) Allegra, and maximize its strengths. In April, the Albany, NY, company disclosed plans to shutter a Syracuse facility focused on early-stage services, looking to save about $1.5 million a year after it takes a charge of up to $6.5 million tied to the move.

- read the announcement

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