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Posted On: 07/16/2007
King Pharma to Sell Manufacturing Facility to JHP Pharma
PharmaManufacturing.com
King Pharmaceuticals, Inc. and JHP Pharmaceuticals, LLC announced on July 16 that they have signed an asset purchase agreement, pursuant to which JHP will acquire King’s Rochester, Mich. sterile manufacturing facility, some of King’s legacy products that are manufactured there, and the related contract manufacturing business. The companies also entered into a manufacturing and supply agreement pursuant to which JHP will provide certain fill and finish support with respect to King’s hemostatic product, Thrombin-JMI (thrombin, topical, bovine, USP).
Eric J. Bruce, Chief Technical Operations Officer of King, stated, “This transaction represents the continued successful execution of our strategy for long-term growth, particularly with respect to the realization of greater operating efficiency for our Company. Importantly, this transaction will enable us to redeploy our current investments in these assets to our ongoing R&D and Business Development initiatives.” Bruce added, “We fully expect JHP will make a solid partner in support of our Thrombin-JMI business.”
Peter Jenkins, co-founder of JHP, said, “JHP is delighted to secure these cornerstone assets for our planned business in the U.S. The acquired products will provide immediate critical mass in our target hospitals and clinic market and we are confident in the opportunity to build the contract manufacturing business at Rochester.” Stuart Hinchen, the other co-founder of JHP, commented, “This transaction defines the immediate future for the Rochester facility and we expect to be an excellent partner for King with regard to the Thrombin-JMI activities that will remain at the site.”
Under the terms of the asset purchase agreement, JHP will pay King approximately $90 million, subject to final inventory adjustments. The agreement is subject to customary regulatory approvals, including antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act. The companies expect to close the transaction during the third quarter of 2007.
King’s 2006 net sales for the legacy products included in the agreement totaled approximately $51 million. Net revenue from contract manufacturing at the facility totaled approximately $14 million during 2006. The agreement does not include King’s new Bicillin (sterile penicillin products) manufacturing and production facility that is also located in Rochester, Mich. King’s current total net book value of the assets which are the subject of this transaction, including inventory, is approximately $151 million. Accordingly, King expects to incur a special charge in the amount of approximately $60 million on closing the transaction. King incurred a net operating loss of approximately $1 million with respect to these assets in 2006.
JHP expects to offer employment to all current employees at the Rochester manufacturing facility.
The legacy branded pharmaceutical products included in the agreement are as follows:
| Adrenalin (epinephrine injection) |
| Aplisol (Tuberculin Purified Protein Derivative, Diluted [Stabilized Solution]) |
| Brevital (methohexital sodium) |
| Delestrogen (estradiol valerate injection) |
| Ketelar (ketamine hydrochloride injection) |
| Pitocin (oxytocin injection) |
| Pitressin (vasopressin injection) |
| Tigan vial (trimethobenzamide hydrochloride injection) |
| Triostat (liothyronine sodium injection) |
| Coly-Mycin M (sterile colistimethate sodium) |
| Coly-Mycin S (colistin sulfate-neomycin sulfate-thonzonium bromide-hydrocortisone acetate otic suspension) |
| Cortisporin-TC (colistin sulfate-neomycin sulfate-thonzonium bromide-hydrocortisone acetate otic suspension) |
About King Pharmaceuticals
King, headquartered in Bristol, Tenn., is a vertically integrated branded pharmaceutical company. King, an S&P 500 Index company, seeks to capitalize on opportunities in the pharmaceutical industry through the development, including through in-licensing arrangements and acquisitions, of novel branded prescription pharmaceutical products in attractive markets and the strategic acquisition of branded products that can benefit from focused promotion and marketing and life-cycle management.
About JHP Pharmaceuticals, LLC
JHP, headquartered in Saddle River, N.J., is a recently formed company founded by Peter Jenkins and Stuart Hinchen, previously senior executives with the leading global specialty injectables company, Mayne Pharma Limited which was recently acquired by Hospira, Inc. JHP plans to become a significant marketer of hospital and clinic based pharmaceuticals in the U.S., as well as a quality contract manufacturer of aseptically manufactured pharmaceuticals with an emphasis on biologic based products. JHP is a private company whose shareholders upon closing of this transaction will include Morgan Stanley Principal Investments in addition to Messrs Jenkins and Hinchen.