SFW Capital Partners will announce later this morning that the Rye, New York-based private equity firm has completed a majority strategic investment in Somerset, New Jersey-based Sannova Analytical, a contract research organization that provides services to pharmaceutical and biotech companies.
Sannova’s founders and current owners, including the Marepalli family, Dr Venkat Reddy, Malleswar Kollu and Geeta Vidiyala, are reinvesting alongside SFW to retain an equity stake in the business. Terms of the private transaction were not disclosed.
PE Hub spoke with SFW co-founder and partner Roger Freeman about why the firm is investing in Sannova and what the plans are for growing the business.
SFW focuses on building market-leading companies in the industrial and life sciences technology sector, and Sannova certainly fits the bill.
“We had been looking for a platform business within bioanalytical services for several years and had gotten to know Sannova a number of years ago,” said Freeman. “The business has a long history, going back to 2006, and it has been a very strong provider to some of the leading companies in the sector.”
Bioanalytical services businesses are poised for growth, Freeman said.
“There’s continuing investment in the R&D associated with the development of new therapeutics,” he said. “The drug development cycles, by themselves, are shortening and, at the same time, becoming more complex. With the shortening drug development cycle, there has also been increasing outsourcing by pharmaceutical companies, particularly to businesses with specific expertise, which provide very high-quality, accurate and efficient testing.”
The bioanalytical and chemistry manufacturing and controls testing services that Sannova provides are critical, because “they are the basis of the data used to evaluate trials, and in regulatory filings,” Freeman explained.
The PE firm’s growth plans include expanding Sannova’s range of services, particularly for the development process, “in areas like impurities and stability testing, first off,” Freeman said. “Secondly, this has been a low-profile business, so we want to expand the sales and marketing capabilities of the business. And finally, this is a very fragmented area, so we will selectively pursue strategic acquisitions. It’s really a multifaceted growth strategy for the business.”
The PE firm is also adding expertise. Dr Michael Silvon, an SFW operating adviser, is joining Sannova’s board as executive chairman.
“Dr Silvon is a very experienced life sciences executive and was former vice president of Charles Rivers Labs’ global biopharmaceutical services division,” Freeman said. Silvon is “a very experienced, strong executive that we’re bringing into the business and onto the board.”
Throughout the pharmaceutical industry, the drivers of growth are “the need to refill pipelines, develop new therapeutics, and then have very good partners that accelerate that process,” Freeman said. “Part of that is looking for partners in the US, versus overseas, so the pharma companies can be close to their partners.”