Direct Capital acquires 51pc of NZ Pharmaceuticals

By Wai Lang Chu

- Last updated on GMT

Related tags: Pharmacology

Private equity firm, Direct Capital has acquired a shareholding of
51 per cent in New Zealand Pharmaceuticals (NZP). The investment by
Direct Capital aims to tap into the growing potential of
glycotherapeutics drugs.

The deal means the remaining 49 per cent of NZP will continue to be owned by the management and staff of NZP and strategic investor Shin Nippon Yakugyo, a Japanese specialty chemicals business. Financial details of the agreement were not disclosed.

On a strategic level, Direct Capital has upped its stake, further cementing its involvement, in the area of carbohydrate-based drugs called glycotherapeutics.

In 2004, NZP began using formulations developed by the Crown-owned Industrial Research institute, to produce these carbohydrate compounds.

The building blocks are used in new drugs that prevent cancer, heart disease and other ailments.

Financing for Direct Capital's acquisition includes the capital expenditure funding required by NZP to build a new factory to manufacture these glycotherapeutic intermediates.

Construction is scheduled for 2006 on the site of the existing head office and manufacturing plant in Linton near Palmerston North.

Under the terms of the agreement, Direct Capital will also get two seats on NZP's board and a new independent chairman will be appointed.

NZP have established a firm footing on the niche sector, sharing the market with only two Italian manufacturers, one of which is Inalco Pharmaceuticals. Together, the three control approximately 90 per cent of the global market.

The company's main product, cholic acid, is manufactured from bovine bile and is an intermediate for a drug used to treat liver related diseases. Other animal based products include taurine, an amino acid used in infant formula, heparin, a blood anticoagulant and ferritin, a natural iron supplement.

Glycotherapeutic drugs are bile based and focus on the role carbohydrates play in human metabolism and their involvement in infectious diseases. Analysts have estimated that glycotherapeutics could be worth $5 million (€4.3 million) to NZP in two to three years and $15 million in the next five years.

Several glycotherapeutic drugs, including GlaxoSmithKline's anti-flu drug Relenza, are already commercially available. Others, including Clofarabine, an anti-cancer agent, and Fondaparunux, a blood anticoagulant, are in the pipeline.

"The investment by Direct Capital is an important pre-cursor to the planned public listing of NZP, which we are targeting within the next three years. This is an exciting and positive development for NZP and our shareholders,"​ commented Richard Garland, NZP​ managing director.

NZP are a company that manufactures pharmaceutical intermediates and diagnostics, producing a range of ingredients used in dietary supplements.

NZP also manufactures natural biochemicals under Good Manufacturing Practice (GMP) conditions, which ensures its products conform to pharmaceutical industry quality assurance standards.

Related topics: Clinical Development, Ingredients

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