Albany Molecular Research, Inc. (AMRI) has completed its previously announced acquisition by The Carlyle Group and affiliates of GTCR LLC.
“With our partners putting in almost a billion in their own capital, and pledging to put in more capital, we can continue to buy companies within this space and build out our platform; and we will continue to do that, looking for companies that do things similar to us,” said AMRI President and CEO William Marth.
While Marth told us that the contract development and manufacturing organization (CDMO) would have grown regardless of the acquisition, the investment from private equity will enable it to “go further, faster.”
“If we would have taken a slower pace many of the companies that would have come up for sale in the next two years or so, we wouldn’t have been able to entertain acquiring them,” he told Outsourcing-Pharma.com.
“Now that we're refreshed with capital … we’ve already begun the search for the next couple of acquisitions,” he added.
The search begins
The company is looking in a variety of areas, but specifically, it is looking for complexity, said Marth.
“There are many great CDMOs out there,” he explained, “we tend to like specialize in those things that we think are more complex to do.”
Today, most of the company’s drug product business is injectable, Marth explained. Why? “Over 50% of pharma’s pipeline moving forward is injectable products. So we think that’s the place to be,” he said.
Additionally, Marth said the company is looking to expand its capabilities in biologics: “We do a lot of early work in biologics and we do the fill/finish work in biologics, but we don’t do a lot of the work in between. To get a footprint in early work or early commercial work in biologic drug substance is important for us.
“A third of the filings on an annual basis now are large molecule, so that’s where we need to be; that’s the next frontier for us,” he added, quipping that his shopping list is long.
Geographically, Marth said AMRI is in good shape and the company is really focusing on specific business segments, not necessarily location.
“I think we happen to be in a place at the right time,” he added. “More work is coming out of pharma into CDMOs; the venture market is still very strong; there’s a lot of early stage work being done.”
An aggressive approach
According to Marth, AMRI has grown from $200m to more than $700m in the last three to four years. Now, he thinks the company can double in revenue and EBITDA again in the same timeframe.
“Over the last almost four years we’ve acquired seven companies … and we needed to do that,” he explained.
When he took over the company in January 2014, Marth said AMRI had about $210m worth of contract revenue and about $35m to 36m coming in from a royalty from Fexofenadine – a royalty that was soon to expire.
“If you remove that royalty from the company we were not profitable,” he said. “So, we had to move very quickly to be able to replace that royalty with real contact revenue and internally generated EBITDA .”
Over the last 3.5 years, Marth said the company has been successful in acquiring these companies, such as including OsoBio and Gadea, and building out their capabilities.
However – now it needs to pay for them. “[The acquisitions] left the company with more leverage than the capital market or the public markets really like,” said Marth, and this left the company with a choice:
“We could have slowed down the pace and paid off the debt over time,” he explained, “or we could do something like this where we sell the company and being in a private market we can put more leverage on it and take a more aggressive approach to building out our platform.”