PharmaCell

business model: PharmaZell is a fast-growing niche specialist for active pharmaceutical ingredients (API) with attractive margins. Thanks to long-term customer relationships and a balanced customer structure, PharmaZell has been the market leader in its market segments for several years and is characterized by a high level of market relevance, particularly in the area of research and development. In addition to its headquarters in Raubling, PharmaZell currently has over 500 employees and operates further facilities in Germany and India as well as a sales office in the USA. PharmaZell is a reliable partner for its customers, which include global companies in the pharmaceutical, chemical and food industries, and delivers clear added value for its customers with customized solutions and a constantly growing product range.

Investment consideration: AUCTUS identified PharmaZell as a subordinate business unit within the Lubrizol Group, but one with a strong market position and enormous growth potential. The market for pharmaceutical products and generics is experiencing constantly growing demand, driven by structural changes within the demographic structure of many industrialized countries and the growing demand for affordable medicines in emerging countries. The expiry of many pharmaceutical patents in the coming years also favors the future growth of the market. In a stable and oligopolistic market, PharmaZell operated successfully as the market leader in several segments.

Increase in value: During the holding period of AUCTUS, PharmaZell’s sales tripled from € 20 million to € 60 million and the company established itself as the market leader in the chronic inflammatory bowel disease and common cold segments. The key measures here were primarily optimized cost control, improved working capital management and further savings through continuous improvements to the production process. Parallel to the acquisition of an existing plant in India, a modern production plant was built in Vizag, India, together with a highly efficient research and development department. These investments have enabled production capacity to be expanded considerably and new product pipelines to be created at the same time. Two core products in particular, as well as the patented manufacturing process, have enabled impressive, previously unattained growth rates and high profitability.

Exit: After a holding period of five and a half years, AUCTUS successfully sold its shares in the company to Ergon Capital Partners in 2011.