Accretive acquisition significantly strengthens Clinigen’s competitive positioning with specialist packaging, labelling, warehousing and distribution capabilities in Europe & the US
Accretive acquisition significantly strengthens Clinigen’s competitive positioning with specialist packaging, labelling, warehousing and distribution capabilities in Europe & the US
Clinigen Group plc (‘Clinigen’ or the ‘Group’, AIM: CLIN), the global pharmaceutical and services company, has agreed to acquire CSM Parent, Inc. (‘CSM’), a specialist provider of packaging, labelling, warehousing and distribution services from its locations in Continental Europe and the US to a global client base, for an initial consideration of $150 million (the “Acquisition”).
Strategy
Acquisition in line with strategy to expand supply and distribution network thereby supporting all parts of the business, providing value added services to its customer base and the provision of access to medicines from pre-launch and unlicensed stages to licensed on a global basis.
Operational and commercial highlights
- Expands Clinigen’s value added services
- Adds specialist packaging, labelling, warehousing and distribution services for clinical and unlicensed products in different regulated markets. Clinigen currently has its own limited facility in the UK and partners elsewhere for these services
- Creates attractive opportunity to cross-sell services to provide the end-to-end solution increasingly required by customers
- Rapidly accelerates position in fast growing Investor Initiated Trials (“IITs”) segment of trials / pre-approval market, estimated to be valued at over $1bn - Further diversifies and expands global client and customer base, adding specialist and niche pharma and biotechnology companies to Clinigen’s predominantly mid-market to large pharma, creating significant cross selling opportunities
- Adds important supply and distribution infrastructure, especially in Continental Europe (Germany and Belgium), which supports current reach across all three businesses – CTS, Unlicensed and Commercial Medicines
- Reinforces flow of business between Clinigen’s three divisions, providing new revenue and cost synergy opportunities
Financial highlights
- Initial cash consideration of $150m on a cash free and debt free basis
- Further contingent consideration of up to $90m in cash
- Payable if CSM achieves growth over a predetermined level of EBITDA in year to 31 December 2019
- As CSM outperforms and the deferred payment rises, overall Clinigen earnings accretion also rises - Financed by new banking facilities (the ‘New Facilities’) and a separately announced equity placing, targeting gross proceeds of up to £80 million (the ‘Placing’)
- Pro-forma leverage, assuming an £80m equity raise, expected to be approximately 2.4x net debt / EBITDA. Given strong cash flow generation leverage expected to reduce towards 2.0x by 30 June 2019
- EPS accretive in first full year of ownership before synergies
- ROIC expected to be in excess of 10% in third full year of ownership before synergies
- Cost synergies of at least £1 million expected by the end of first full year with potential for revenue synergies over time
Year end results and acquisition of iQone
- The Group has also today published results for the year to 30 June 2018 which showed adjusted gross profit up 14%, adjusted EPS up 10% to 45.4p (2017: 41.3p) and full year dividend increased 12% to 5.6p (2017: 5.0p) – see separate press release
- The Group has also conditionally acquired iQone, a Swiss based speciality pharmaceutical business, for a total initial consideration of €7.5 million – see separate press release
Shaun Chilton, CEO of Clinigen, said:
“This acquisition is an exciting next step in line with our strategy and realising our vision to become the global trusted leader in access to medicines.
“CSM will expand further our global supply and distribution network in strategically important regions, particularly Continental Europe, and will support all parts of our business. It extends our platform to provide access to medicines from the pre-launch and unlicensed stages through to licensed status on a global basis.
“Equally importantly, CSM’s specialist labelling and packaging capabilities will enable us to offer this previously largely outsourced service to customers for clinical trial and unlicensed products across different markets. We expect this will also rapidly accelerate our leading position in a growth segment of the clinical trial/pre-approval market, services to Investigator Initiated Trials, which is estimated to be valued at over $1bn.
“Operationally, this acquisition will significantly strengthen our competitive positioning. This combination will significantly improve Clinigen’s capability to support the full life-cycle of a medicine at key points - from clinical trials to unlicensed to licensed – across an increasing number of territories.”
For the full announcement, visit www.clinigengroup.com
- ENDS -
Investor and analyst conference call
The planned analyst results meeting is now at 8.30am, not 9.30am. A presentation will be available shortly to analysts and investors on the Clinigen website at: ww.clinigengroup.com. A recording of the meeting will be available online later in the day.
Analyst or investors who wish to dial in please contact Instinctif Partners on +44 (0) 20 7457 2020 or emailclinigen@instinctif.com
The information contained in this announcement is inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon publication of this announcement, this inside information is now considered to be in the public domain.
Issued for and on behalf of Clinigen Group plc by Instinctif Partners.
For more information please contact:
Clinigen Group plc
Shaun Chilton, Group Chief Executive Officer
David Bryant, Chief Business Officer
Matt Parrish, Head of Investor Relations
Numis Securities Limited
Michael Meade / Freddie Barnfield (Nominated Adviser)
James Black / Tom Ballard (Corporate Broking)
RBC Capital Markets - Joint Broker
Marcus Jackson / Elliot Thomas
Instinctif Partners
Melanie Toyne-Sewell / Alex Shaw / Deborah Bell
Tel: +44 (0) 1283 495010
Tel: +44 (0) 20 7260 1000
Tel: +44 (0) 20 7653 4000
Tel: +44 (0) 20 7457 2020
Email: clinigen@instinctif.com
Notes to Editors
The Unlicensed Medicines operation encompasses Managed Access and Global Access division, and the unlicensed businesses within Link and Quantum. The Commercial Medicines business encompasses Clinigen’s own products and the commercial businesses of Link and Quantum.
About Clinigen Group
Clinigen Group plc (AIM: CLIN) is a global pharmaceutical and services company with a unique combination of businesses focused on providing ethical access to medicines. Its mission is to deliver the right medicine to the right patient at the right time through three areas of global medicine supply; clinical trial, unlicensed and licensed medicines.
Commercial Medicines
Clinigen acquires global rights to niche hospital only and critical care products, revitalising these assets around the world and returning them back to sustained growth. It is also the commercial partner for licensed and branded generic medicines in regions such as the Africa and Asia Pacific region.
The Group also has an ‘unlicensed to licensed’ strategy, where it looks to take unlicensed medicines with commercial potential and licences them, helping to address unmet medical need and allowing the Group to capitalise on its market-leading positions.
Unlicensed Medicines
Clinigen is the global leader in ethically sourcing and supplying unlicensed medicines to hospital pharmacists and physicians for patients with a high unmet medical need. The Group manages early access programs for innovative new medicines and provides ‘on-demand’ access globally to medicines which remain unlicensed at the point of care.
Clinical Trial Services
Clinigen is the global market leader in the specialist supply and management of quality-assured comparator medicines and services to clinical trials and Investigator Initiated Trials.
For more information on Clinigen, please visit www.clinigengroup.com
