Shionogi Qualicaps sold to private equity firm
its capsule subsidiary Shionogi Qualicaps to private investment
group the Carlyle Group in order to focus on its drug development
activities.
Shionogi Qualicaps is ranked second in the world market for pharmaceutical capsules, after Pfizer subsidiary Capsugel which has a market share of around 50 per cent and its parent said that in independent hands it has more chance of reaching its full potential.
This transaction is believed to be the first case where a major Japanese pharmaceutical company will spin off its business to a private equity fund.
Globally, the largest pharmaceutical and supplement dosage delivery forms by volume are tablets which, according to industry sources, account for around 75 per cent of the total global oral dose market, with annual volumes of around 900 billion tablets. Gelatin two-piece capsules are the second largest sector by volume and accounts for around 20 per cent of the total market, at 240 billion capsules per annum.
Shionogi Qualicaps Group is the industry leader in Japan taking more than 60 per cent share in the pharmaceutical hard capsules market, and is the second largest in the global market including the US and Europe.
The Shionogi Qualicaps Group consists of Shionogi Qualicaps Co Ltd in Japan., Shionogi Qualicaps SA of Spain, Netherlands-based Shionogi Europe BV and Shionogi Qualicaps Inc in the US. In addition to gelatine capsules, the company also supplies capsule filling equipment and sealing machinery.
Under the terms of the share transfer, Carlyle has acquired 100 per cent of the four subsidiaries via a management buyout. The deal is expected to close in October, and all management and employees of Shionogi Quaicaps will be retained by the new owners, said Carlyle in a statement.
Tamotsu Adachi, Carlyle managing director and Head of the Japan Team at the firm, said: "[the] hard capsule is an indispensable part of the drug affecting its efficacy, so there will be an ever growing need for stable supply of high quality, safe products. Steady market growth is also expected for hard capsules in the health and nutrition sector."
At the same time, as the pharmaceutical industry becomes increasingly global, it is critical for the hard capsule business to strengthen its manufacturing and marketing capabilities accordingly, he added. Carlyle has invested in more than 20 healthcare companies, and Adachi said this experience would help the Shionogi Qualicaps business develop.
Shionogi posted net income of 636 million yen (€4.7m) on revenue of 12.1 billion yen for the capsule business in the 12 months to March 2005. The company said it has raised its year to March 2006 net profit forecast to 22 billion yen from 18 billion yen on gains from the sale of the capsule units.
