Public Recipharm plans acquisitions in consolidating CMO sector

By Gareth Macdonald

- Last updated on GMT

Recipharm outlines bluesky acquisition plan post IPO
Recipharm outlines bluesky acquisition plan post IPO
Recipharm AB has not ruled out battling with Catalent and Patheon in the softgels market and confirmed that acquisitions were the key driver for its decision to go public.

The Swedish contract development and manufacturing organization (CMO) joined the NASDAQOMX exchange on April 3, weeks after confirming​ circulating market rumors​ that it was considering going public. 

The move was out of step with the majority of Recipharm’s privately owned peers – with the exception of Catalent which aims to go public this year​ – and was seen as an indication that it plans to beef up capabilities and geographic reach.

This take was confirmed by Recipharm, which told that: “One of the prime reasons for the IPO was to be able to participate in the changes and consolidation that is occurring in the industry​.”

Even before the IPO Recipharm was no slouch in the consolidation department. In the past five years, for example, the CDMO has completed multiple acquisitions​, numerous facility expansions​ and carve outs​.

However, recent consolidation in the services sector has further increased the pressure on CDMOs to offer both a diverse range of capabilities and global reach.

Recipharm told us that: “Our asset base is still focused on Europe although we have customers worldwide. There are still areas of Europe where we believe we can still expand, but we are looking further afield.

An obvious choice is the US but there are also attractive opportunities in emerging markets which we will continue to evaluate​.”

Softgel and steriles

One increasingly important CDMO battleground is softgel formulations with Catalent, Patheon, Aenova, Fareva, Famar and DPT all competing for market share. 

Unlike these top 10 CMO peers, Recipharm's softgel capacity is limited, which prompted us to ask if the firm plans to plug this gap with its new financial clout.

In response, the firm told us “We don’t rule anything out. Our strategy is to be a broad service provider and if the right opportunity came along we would consider it​.”

However, one clearer area of interest and potential post-IPO investment is the sterile drug market.

Recipharm lost some ground in this area after halting steriles production at its facility in Ashton-under-lyme​ in the UK in 2011 following equipment failures.

The firm told us that: “Steriles is an important part of our business and we are already a significant player. We are currently investing in both or our sites including a €32m plus new lyophilisation facility in Germany​.”

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