Temasek and CVC buy major stake in US drug firm Alvogen

LONDON - Temasek Holdings and European private equity fund CVC Capital Partners have bought a controlling stake in United States pharmaceutical company Alvogen.

A Temasek Holdings spokesman yesterday confirmed its participation in the deal to The Straits Times.

The new owners also include US investment group Vatera Healthcare Partners, London-based CVC said in a statement.

The size of the stake the consortium purchased was not disclosed, but the deal values the company at around US$2 billion (S$2.67 billion), a source familiar with the matter told Reuters.

The transaction is the latest sign of the hectic pace of deal-making in the healthcare sector, which has seen more than US$250 billion of mergers and acquisitions so far this year, up nearly two-thirds from a year ago, according to Thomson Reuters data.

Alvogen chairman and chief executive Robert Wessman sold a stake in the company to the private equity fund Pamplona last year. Mr Wessman and Pamplona will retain a stake.

Alvogen's current revenue this year stands at US$750 million, with core earnings (Ebitda, or earnings before interest, taxes, depreciation and amortisation) of US$220 million. The fast-growing company currently has 350 generic products on the market and has been pushing into the Asia-Pacific region with several acquisitions, including that of South Korea's Dream Pharma last year.

"We have grown from a small base in the US back in 2009 to a global player with operations in 35 countries," Mr Wessman told Reuters. "Our growth has been 76 per cent a year in the past six years, a majority being organic, but with access to network and capital from our partners, you should expect to see more acquisitions."

Generic drugmakers like Alvogen are looking to get bigger to enjoy economies of scale in manufacturing and distribution, while CVC has an interest in health through previous deals, such as a 2012 investment in Chinese drugmaker Venturepharma.

"We want to be a company that can build up one of the leading positions in the Asia- Pacific, and on a global level we expect to be among the leading companies in a few years from now," Mr Wessman said.

He explained Alvogen's strategy as focusing on high-growth emerging markets, developing a "difficult to make" product portfolio in the US market, and building a strong presence in copies of biotech drugs or biosimilars.

CVC has just bought the theatre production company Stage and the German perfume business Douglas, and it also recently hired Goldman Sachs dealmaker Alex Dibelius as a managing partner.

A version of this article appeared in the print edition of The Straits Times on June 23, 2015, with the headline 'Temasek and CVC buy major stake in US drug firm'. Print Edition | Subscribe