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Siegfried buys into US controlled API sector

19-May-2005

Switzerland's Siegfried Group, a specialist in active pharmaceutical ingredients (APIs), dosage forms and biopharmaceuticals, has boosted its position in the production of controlled substances with the acquisition of US-based Penick Corporation in a deal worth $30 million, reports Phil Taylor.

Controlled substances - defined in the US as APIs monitored by the Drug Enforcement Administration (DEA) - are covered by strict import regulations. Penick is the holder of one of the four currently issued import licenses for the primary raw materials for the production of controlled substances - such as coca leaves, raw opium, poppy straw, and poppy straw concentrate - in the US.

The acquisition of the company effectively opens up the US market to Siegfried .

 

Controlled APIs are one of a number of areas perceived as offering growth prospects for API suppliers and contract manufacturers, at a time when the industry is being affected by overcapacity in Europe and the US, increased competition and pressure on margins.

 

There are still relatively few suppliers in this segment, mainly because of the high barriers to entry, but the market is growing fast on the back of new development in central nervous system drugs and novel delivery methods for pain medications. Producing controlled substances requires special manufacturing equipment to isolate the API, as well as specialised filtration, drying, filling, drumming and weighing equipment, and there are stringent requirements for security at plants.

 

Fellow Swiss company Clariant also made a recent foray into the controlled substances area.

 

The acquisition, which concluded today, will involve Penick moving its activities to Siegfried's site in Pennsville, New Jersey. The majority of Penick's products are ingredients used in pain management, Siegfried said.

 

First sales resulting from the acquisition are expected in the 2006 financial year.