Chesire’s Dechra buys Med-Pharmex of US for £221m

Chesire-based international veterinary drugs giant Dechra Pharmaceuticals announced it has acquired Med-Pharmex, a veterinary pharmaceutical manufacturer based in Pomona, California, for £221.5 million.

“The acquisition will be funded from existing available debt resources,” said Dechra.

“Med-Pharmex is the acquisition referred to in the fundraising announcement on 21 July as the potential acquisition.”

Northwich-based Dechra said the deal provides further product scale to Dechra’s operations in the US, the world’s largest animal health market, and adds a pipeline of further products.

“Dechra has known Med-Pharmex for a number of years, and it has been a long term acquisition target,” said the Chesire firm.

“Med-Pharmex, which employs approximately 130 people, was founded in 1983 and serves the CAP, FAP and equine markets.

“Approximately 75% are CAP and equine products, the majority of which fit into Dechra’s therapeutic sectors.

“Med-Pharmex manufactures its own products at its facilities in California, with capacity which Dechra plans to utilise for its own manufacturing strategy over time.

“It has expertise in topical, oral and certain injectable products.

The majority of Med-Pharmex’s revenue is derived from white label products which are sold through distributors.

“Dechra intends to bring some of these products in-house and sell through its own sales and marketing channels, which will provide a material synergy benefit.

“In the longer term, synergies will also be realised from the integration and improved utilisation of the manufacturing facilities.

“There will be some incremental investment in the operations of the business (£5 million in capital expenditure).

For the 12 months ended 31 December 2021, Med-Pharmex generated audited revenues of US$43.0 million and an adjusted EBITDA of US$15.3 million.

“Audited gross assets as at 31 December 2021 were US$77.0 million.

“Dechra expects the acquisition of Med-Pharmex to be immediately accretive to underlying earnings per share.

“Following completion of the acquisition, the group’s leverage is expected to be c.1.8x net debt to EBITDA as at 31 December 2022.”

Dechra CEO Ian Page said: “I am delighted that we have completed the acquisition of Med-Pharmex, a company that I have been in dialogue with for a number of years.

“The US market is highly consolidated, therefore this is a unique opportunity to add several new products to our portfolio, enter the US FAP market and improve the manufacturing footprint for our North American business.”

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