PCI Pharma, backed by Partners Group, Frazier Healthcare, kicks off sale process

A deal is expected to value the provider of contract manufacturing services and packaging for pharmaceutical companies in the $2.5bn to $3bn range.

Proving an outperformer through the downturn, Partners Group-backed PCI Pharma Services formally kicked off its sale process, five sources familiar with the matter told PE Hub

The process launched about a week ago, some of the people said. Jefferies is providing financial advice to the company, which is expected to field interest from large buyout funds, they said.  

Philadelphia’s PCI is marketing north of $170 million in EBITDA, sources said. The auction is likely to produce a deal valued in the $2.5 billion to $3 billion range, they said.

The Wall Street Journal reported on the adviser engagement in February before a process was underway.

Led by Salim Haffar, PCI supports pharma and biotech companies worldwide through its contract development and manufacturing services, clinical trial services, as well as commercial and pharmaceutical packaging technology. 

While the downturn has weighed on many healthcare services companies providing elective procedures, PCI has seen an acceleration in growth, topping its financial estimates, sources said. 

Underlying market dynamics favor the company, sources said. For example, covid-19 has cast a light on the entire supply chain that brings a drug from manufacturing to commercialization. Security of supply concerns in turn are fueling an acceleration in the shift from east to west across the pharmaceutical supply chain, sources said.

At the same time, there’s a rise in demand for pharmaceutical packaging on the commercial side, while a surge in biotech funding for new therapies is further benefiting outsourced providers.

A return of the leveraged loan market has also opened the door for scale companies such as PCI to push forward, sources noted.

Partners Group’s investment in PCI dates back about four years. The Swiss-based buyout fund in June 2016 agreed to acquire a majority stake in PCI Pharma from Frazier Healthcare Partners, the latter which retained a minority equity stake. Thomas H. Lee Partners is also an investor in the company. 

Financial terms weren’t disclosed, but the deal valued PCI at just under $1.1 billion, the Wall Street Journal reported at the time. 

PCI’s inception dates to June 2012, when Frazier carved out the commercial pharmaceutical packaging business of Catalent Pharma Solutions, creating Packaging Coordinators, Inc. 

In other brewing activity in the outsourced pharma services arena, Linden Capital Partners in June formally relaunched its sale process for ProPharma Group. The company provides compliance-related consulting services to the life sciences industry. The process is targeting an August signing, PE Hub wrote.

Partners Group and Jefferies declined to comment. PCI and Frazier didn’t return requests for comment.

Action Item: Check out Partners’ latest Form ADV 

Update: This story has been updated to include THL as an investor in PCI.