Cinven acquires Mercury Pharma

LONDON—Private equity firm Cinven Ltd. has acquired Surrey, U.K.-based Mercury Pharma for $732 million, with the purchase of the international specialty pharmaceutical company intended "as aplatform for further industry consolidation."

"Therealization of Mercury Pharma marks the continued development ofHgCapital's investment focus in the healthcare sector," said HgCapital'shead of healthcare, Philipp Schwalber, in a statement on Friday, after announcing his firm had sold Mercury. "Wecontinue to seek out businesses that enjoy niches of secular growthdespite the challenges facing much of the healthcare space," he said.

Mercury markets niche and branded pharmaceuticals, with its customersincluding retail pharmacies and hospitals in the United Kingdom, as well asglobally in more than 50 countries, many of them inSoutheast Asia and the Middle East.

The company reportedly has a broad portfolioof well-established products including treatments for anaesthesia,antipsychotic, arthritis and anti-inflammatory, cardiovascular,critical and emergency care, joint and musculoskeletal, pain andpulmonary arterial hypertension.

Cinven's healthcare team identified niche pharmaceuticals as an attractive segment on the basis that:

it is comparatively insulated from patent expiry issues which affect the broader pharmaceutical industry;
it is a relatively fragmented market, providing opportunities for a'buy-and-build' strategy, in particular, given Cinven's significantability to identify add-on opportunities through its sector expertise;and
it benefits from underlying demographic trends that will result inmore patients requiring treatment with the cost-effective products inMercury's extensive portfolio.

Headquartered in Surrey, Mercury has operational bases in the United Kingdom,Ireland and India.

"We identified niche and branded pharmaceuticals as an attractivesegment and, within that, Mercury as a strongly performing business," said Supraj Rajagopalan, a partner at Cinven. "Inaddition to its excellent existing product portfolio and pipeline—bothof which should drive strong organic growth—it is a fantasticplatform for further consolidation both in the UK and internationally.Our in-depth knowledge of this sector, given our long-term focus onhealthcare, has enabled us to identify a number of compellingacquisition opportunities which we hope to execute in the early stagesof our investment. Despite the challenging macroeconomic environment, there willcontinue to be demand for the essential medicines provided by Mercury.In a number of areas, Mercury is actually able to work with payors toreduce costs to the healthcare system."

"Our investment in Mercury demonstrates our focus on acquiringEuropean-based companies with significant international growthprospects, as well as our ability to originate investments through ourstrong sector focus," Rajagopalan added.

"In the past two years, the Mercury business has been streamlined torefocus on its core specialty pharmaceutical products. We have awell-diversified product range with high barriers to entry and areinvesting in creating a pipeline of similarly specialist medicines," said John Beighton, CEO of Mercury Pharma. "Our15 new products launched in 2011/12 are already starting to showearnings momentum and we have a strong product pipeline. Despite thecurrent economic environment, our products and company are extremelywell positioned. "We are delighted to be partnering with Cinven who, with theirexperience in both healthcare and 'buy and build' strategies, willprovide invaluable expertise and investment as we enter this next phaseof growth."