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Mitsubishi to buy dominant HPMC capsule maker Qualicaps as gelatin shortages continue

By Gareth Macdonald , 03-Jan-2013

Mitsubishi Chemical Holdings (MCHC) has announced plans to buy the ‘dominant’ pharma-grade HPMC capsule maker Qualicaps as the global gelatin shortage continues.  

The proposed deal – which is expected to complete in March – values Qualicaps at $654m (€495m). Mitsubishi set out its rationale last week , explaining that Qualicaps holds more than 20 per cent of the global pharma capsule sector.

We believe that the proposed transaction will strengthen the existing businesses of both MCHC and Qualicaps” it said, adding that “Qualicaps’ global customer base is highly complementary to MCHC’s existing healthcare solutions and API businesses.”

MCHC highlighted Qualicaps' “dominant position in the non-gelatin hypromellose capsules (HPMC)” as an important driver for the acquisition.

In 2012, a number of gelatin suppliers increased their prices – most notably Rousselot – citing raw materials shortages as the cost of complying with new EU-wide sow housing laws see many producers leave the market.

Given such circumstances drug industry demand for HMPC capsules may well increase.

Growth through acquisitions

Qualicaps – which produces HPMC and gelatin capsules and processing equipment and operates manufacturing sites in Japan, Europe and North America – has been owned by the Carlyle Group since 2005.

In the years since the takeover the US private equity firm expanded Qualicaps through the acquisition of Canadian capsule maker Pharmaphil  and Canadian capsule manufacturing technology company Technopar Equipment and Service and the opening of a new production site in Romania.

Qualicaps ended 2011 with operating income of 3bn yen and revenue of 17.6bn yen - some 64 per cent of which came from outside Japan – and is predicted to have seen sales grow to around 19bn yen in 2012.

The role Carlyle played in driving’ growth was acknowledged by CEO Bernd Brust who said: “During Carlyle’s ownership, our revenue and EBITDA increased by more than 50 per cent and 120 per cent respectively through development of Quali-V capsules and expansion into new markets and product segments.”

He added that: “We believe joining Mitsubishi Chemical Holdings Group will enable us to further expand our business, creating substantial synergies with Mitsubishi Chemical's healthcare business.”

Mitsubishi has not disclosed how it will integrate Qualicaps into its existing business units, which consist of Mitsubishi Chemical, Mitsubishi Plastics, Mitsubishi Rayon and the recently reorganised  division Mitsubishi Tanabe Pharma.

When completed the deal will see Mitsubishi join private equity owned Capsugel  and recent Patheon acquisition Banner Pharmacaps  as a leader of the pharmaceutical capsule production sector.

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