Avecia activity at Expo hints at API industry upturn.

By Wai Lang Chu

- Last updated on GMT

Related tags Manufacturing

Specialty chemical company Avecia featured prominently at the
recent CPhI Expo in Madrid, announcing investments and activity,
which hint at the business of custom synthesis of APIs and advanced
intermediates coming back into favour.

The industry is not foolish enough to think that this sector has reached the heights achieved some five years ago. Reorganisation continues with intense speculation that consolidation, which has been oversupplied for more than five years, is not over.

Pharmaceutical company, Nicholas Piramal India (NPIL), announced that it had signed an acquisition deal with UK-based Avecia Pharmaceuticals for £9.5 million (€14 million). The agreement is inclusive of funding Avecia's UK pension fund deficit of £8-9 million

The acquisiton is NPIL's second M&A transaction in the UK after its acquisition of Rhodia's Inhalation Anaesthetics business in December 2004.

Rajah Ananthanarayanan, president of NPIL Pharma,​ India, told In-PharmaTechnologist.com:​ "This acquisition underlies our ambition to grow into one of the top 5 custom manufacturing businesses in India."

"This acquisition makes us a true global manufacturing player, with our worldwide interests spread across the US, Europe and India with access to technologies in chiral synthesis, fermentation, biotransformation and high potency substances."

Ananthanarayanan added that Avecia was selected because of its strong presence in aspects of the drug lifecycle particularly the phase trials.

The agreement means that the reconfigured asset base will include access to nearly 100 early-phase assets and launched products.

The acquisition of Avecia Pharmaceuticals is representative of a new restructuring trend in the global pharma custom manufacturing industry.

Till recently the industry, worth $15-billion, used to be dominated by the European and North American firms with access to technologies and customers. But, over the last few years, increased cost pressure and a downturn in the pharma industry have put these businesses under pressure.

Industry experts believe that successful custom pharma manufacturers of the future will have a strong manufacturing base in India with technology and early-phase beachheads in North America and Europe.

"I'm confident that this acquisition marks the start of a trend that will recognise the importance of India as well as China as a strong manufacturing base in which successful custom pharma manufacturers of the future will invest in,"​ said David Killworth, vice-president of Avecia Pharmaceuticals.

NPIL's purchases indicate something of an acquisitive streak in which the assumption would be to increase its presence in the North American market. However, Ananthanarayanan commented that there were currently no plans to expand into the US although further acquisitions had not been ruled out.

Avecia comprises three business entities: Avecia Pharmaceuticals Ltd (APL) in the UK, Torcan Chemical Ltd in Canada and a 25 per cent ownership of Reaxa Ltd, also in the UK. These companies clocked consolidated sales of £36.1 million in 2004.

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