Pfizer sells drug delivery unit Capsugel for $2.38bn
pharmafile | April 5, 2011 | News story | Manufacturing and Production |Â Â Capsugel, Kohlberg Kravis Roberts & Co, Pfizer, pharmaceutical capsulesÂ
Pfizer has agreed to sell its Capsugel unit to private equity firm Kohlberg Kravis Roberts & Co. for $2.38 billion in cash and will use the proceeds to fund an expansion of its ongoing share buyback programme.
The drugmaker has been looking into the prospects for Capsugel for some months, and hired Morgan Stanley last year to help find a buyer for the company, which manufactures capsules used in pharmaceuticals and other healthcare products.
Capsugel became part of Pfizer through its purchase of Warner-Lambert in 2000. The business specialises selling hard and liquid-filled capsules to other drugmakers, as well as other drug delivery systems, and achieved sales of around $750 million last year, a fraction of Pfizer’s $68 billion in annual revenues.
Analysts said that operating as a stand-alone unit would help Capsugel accelerate growth in its business, which has been slow but steady while within the Pfizer group. A key priority will be to further expand its operations in emerging markets and capitalise on its premium drug delivery technologies, such as liquid-filled capsules and non-gelatine capsules suitable for vegetarians.
Pfizer’s divestment ties in with plans announced earlier this year to slim down its operations by as much as 40%, and speculation has been mounting that Capsugel could be the first of a number of businesses destined for sale or spin-out, with others in the frame potentially including its consumer health and veterinary medicines units.
The drugmaker is trying to revamp its structure to help it cope with the loss of patent protection for cholesterol drug Lipitor (atorvastatin) later this year.
Pfizer also reduced its revenue forecasts for 2011 as a result of the deal, saying it now expects to post $65.2-$67.2 billion instead of its earlier range of $66-$68 billion. The divestment is expected to close in the third quarter of this year.
Phil Taylor
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