AAIPharma sells development services unit
pharmafile | July 27, 2009 | News story | Manufacturing and Production, Research and Development | AAI Pharma
US pharmaceutical services firm AAIPharma has sold its drug development division to a private equity firm in another example of the consolidation that is sweeping through the outsourcing sector.
The deal sees the end of AAIPharma's strategy of operating as a one-stop shop for pharmaceutical services – from drug discovery through to commercial manufacturing – and brings it back into the mould of a contract research pure-play.
The company has sold its Pharmaceutical Development division, which offers formulation, manufacturing and analytical chemistry covering both small molecule and biopharmaceuticals, to Water Street Healthcare.
It retains the Early Clinical and Clinical Development divisions, which carry out phase I-IV trials for clients, as well as pharmacology and bioanalytical services. The clinical business has a particular specialisation in oncology studies.
Water Street Healthcare has agreed to invest $75 million to purchase and provide development funding for the Pharmaceutical Development division, which will be renamed AAIPharma Services Corp. and will remain at its Wilmington, Delaware base. AAIPharma said none of the division's 450 jobs have been cut as a result of the sale.
The sale also includes a sterile products manufacturing facility in Charleston and an analytical chemistry facility in Chapel Hill. Lee Karras, who has led the division for the past three years, has been named chief executive of the new company.
In a statement, AAIPharma noted that pharmaceutical and biotechnology companies invested more than $115 billion in drug research and development globally last year, with a quarter of that expense going to outsourcing partners.
The market for outsourced drug development services is expected to grow at a compound annual rate of more than 10% through to 2015.
AAIPharma has had a tumultuous few years. It narrowly escaped liquidation in 2006 by selling off its pharmaceutical products division and buying CAC, a French CRO. Since then the firm has been concentrating on expanding its clinical services portfolio, with the creation of business units in eastern Europe and also in Latin America via the purchase of Instituto de Pesquisa Clinica de Sao Paulo of Brazil.
