Warburg-backed Sterigenics buys Nelson Labs to create largest sterilization, testing firm

Contract sterilization player Sterigenics, which was acquired last year in a deal reportedly valued at $2 billion by private equity firms Warburg Pincus and GTCR, has bought Nelson Laboratories. The deal wraps the largest U.S. sterility testing services for medical devices, pharmaceuticals and tissues into the Warburg portfolio company--making it the largest provider globally of sterilization services and testing, according to the company.

This gives Sterigenics a unique combination of dominance in sterilization services and testing. The move comes at an interesting time for the medical device industry, which is still floundering to assure the public that reusable devices are free of contaminants. The most prominent case-in-point is the years-long struggle to ensure that duodenoscopes are free of contamination including antibiotic-resistant bacteria that have led to a series of deaths and injuries across a number of U.S. hospitals.

A duodenoscope is a type of endoscope; they are flexible, lighted tubes--with tough to sterilize junctures--that are threaded through the mouth into the top of the small intestine, or the duodenum. The FDA, the U.S. Department of Justice and Congressional committees have all taken on the intransigent and high-profile problem of duodenoscope contamination. The FDA is focused on updating reprocessing instructions for duodenoscopes that are marketed in the U.S.--to ensure that they are effective.

But what the duodenoscope scandal makes clear is that ensuring the avoidance of medical device contamination is a timely industry opportunity--one that Sterigenics is in a prime position to address, particularly with the addition of Nelson Laboratories. The financial details of the acquisition remained undisclosed.

The Salt Lake City, UT-based outfit has 570 employees, including 300 scientists and 60 specialist microbiologists. Nelson has 85 labs running out of 5 buildings, all in Salt Lake City. The lab already has more than 3,000 clients across 47 countries--and offers more than 400 microbiological and analytical tests.

Michael Mulhern, Sterigenics CEO

Nelson Labs will remain in Salt Lake City and be combined with Sterigenics' existing microbiological and analytical testing and consultancy, SteriPro Labs.

"This is a significant strategic acquisition to help build out Sterigenics' lab testing and service capabilities on a global scale, enabling us to better serve our multinational customers," said Sterigenics CEO Michael Mulhern in a statement. "We will continue to explore additional expansion opportunities for our lab services to meet our customers' growing needs."

He added, "We believe that the fit is perfect with Sterigenics and look forward to working together on our shared mission of improving global public health."

- here is the announcement

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