(Reuters) – PharMEDium Services LLC, a venture capital-backed provider of pharmacy compounding services to hospitals, is in discussions to sell itself for close to $1 billion, according to people familiar with the matter.
The Lake Forest, Illinois-based company is working with JPMorgan Chase & Co and is in talks with a small group of potential private equity buyers, including TPG Capital LP, about a possible deal, two of the people said on Tuesday.
The people asked not to be identified because the negotiations are private. Representatives of PharMEDium, JPMorgan and TPG did not immediately respond to requests for comment.
PharMEDium operates centers in four U.S. states where it compounds finished medicines from drug manufacturers and then dispatches them to thousands of hospitals across the country.
Traditionally, pharmacists who compound medications mix tailored doses for individual patients in response to a specific prescription.
The practice has mushroomed over the last decade, with some pharmacies selling thousands of doses of regularly used mixtures without prescriptions for physicians to keep for future use.
On Monday, the U.S. Senate approved a bill designed to prevent quality control issues that led last year to a deadly outbreak of fungal meningitis traced to a tainted pharmaceutical mixed by a Massachusetts pharmacy. PharMEDium was not associated with the scare and issued a statement on Monday welcoming passage of legislation.
A sale of PharMEDium would come more than six years after venture capital firm Oak Investment Partners bought a stake in the company from the private equity and venture capital arms of Robert W. Baird & Co, which together with PharMEDium founder and chief executive David Jonas retained equity stakes.
The $200 million recapitalization of the company in 2007 also involved $73.5 million in credit facilities by Allied Capital Corp, which has since been acquired by Ares Capital Corp .
PharMEDium was created in its current form in 2003 through the merger of newly formed PharMEDium Healthcare Corp with Baxter International Inc’s Compass Services unit.