Outsourcing to grow 10%, says new AAIPharma Services owner WSHP

By Gareth Macdonald

- Last updated on GMT

Related tags: Pharmacology, Investment

US private equity group Water Street Healthcare Partners (WSHP) says its purchase of AAIPharma’s pharmaceutical development business was a “unique opportunity” to invest in an expanding market.

The new unit, which will be renamed AAIPharma Services, will offer analytical chemistry, formulation development, clinical packaging, oral drug delivery and contract manufacturing services from its base in Wilmington, North Carolina.

WSHP’s Peter Strothman told Outsourcing-pharma that, although the business’ primary focus will helping clients create traditional small-molecule drugs, the unit will also provide some biopharmaceutical development services.

He explained that a key motivation for the deal was the growth of the $115bn (€80bn) global outsourcing sector, which WSHP predicts will grow by more than 10 per cent over the next five years.

The rising complexity of drug development and the costs related to maintaining those capabilities in-house are leading global pharmaceutical and biotech companies to increasingly turn to outside resources for assistance​.”

Strothman went on to say that: “We met with [AAIPharma] President and CEO Ludo Reynders several years ago after identifying [the firm’s] pharmaceutical development business as an attractive target for investment.

WSHP has earmarked $75m in financing to support its new unit and is developing a “strategic growth plan that will build the company into the leading provider of drug development services​.”

AAIPharma’s clinical focus

Sale of the pharmaceutical development to WSHP also fits AAIPharma’s recent efforts to refocus its business on the clinical development sector.

In 2005, the US firm filed for bankruptcy, narrowly avoiding it a year later by divesting its products division and investing in French contract research organisation (CRO) Cvitkovic & Associes Consultants (CAC).

At the time, Reynders explained that CAC’s clinical “complement the clinical services that AAIPharma currently provides its clients,"​ adding that this would be the firm’s focus going forward.

In the subsequent years AAIPharma has made considerable efforts to expand its clinical business in emerging trial hubs like Eastern Europe and, more recently, Latin America with the acquisition of Instituto de Pesquisa Clinica de Sao Paulo in Brazil.

Related topics: Preclinical Research, Preclinical

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