Permira has agreed to acquire a controlling shareholding in German pharmaceutical Neuraxpharm from UK private equity firm Apax Partners, in one of the largest European pharmaceutical deals of 2020 so far.

The transaction values the company at over €1.6bn, a person familiar with the situation told Private Equity News. Investment bank Jefferies, which advised the sellers, described it as “the largest in European pharma of 2020 to date”.

Based in Dusseldorf, Neuraxpharm is focused on the treatment of the central nervous system (CNS), providing medication for chronic patients suffering from neurological and psychiatric disorders including epilepsy, Parkinson’s, Alzheimer’s, depression and psychosis.

The company was founded in 1985, has 850 employees and annual revenues of €480m. It has a direct presence in 12 European countries and its products are sold in more than 50 countries globally, according to its website.

Following the completion of the transaction, expected in the fourth quarter of this year, Permira plans to support the company’s further growth through a buy and build strategy, Dr. Jörg Rockenhäuser, head of DACH at Permira, said.

“Permira funds will back Neuraxpharm to reach the next level of growth. Our joint goal is to create the leading European CNS specialty platform with further acquisitions and strong organic growth,” he added in a statement.

Neuraxpharm has been under Apax stewardship since 2016 and its sale generated a 3.5x return and an internal rate of return (IRR) of 36%, according to a market announcement.

“Apax Partners has been an outstanding partner for Neuraxpharm’s management team over the last four years, as we have embarked on international expansion, invested in new differentiated products and grown the employee base,” Dr Jörg-Thomas Dierks, CEO of Neuraxpharm, said.

Neuraxpharm deal reflects the growing interest of private equity in assets in the pharma, medical & biotech sectors since the pandemic hit. Businesses in these sectors have been able to sustain operations and continue serving customers through lockdowns, providing potential buyers with a clearer view of current and future earnings.

Marquee deals in the sector this year have included Warburg Pincus leading a €550m secondary buyout of biotech group Polyplus from healthcare specialist Archimed in April; mid-market firm Inflexion carving out Rosemont Pharmaceuticals in June; and CBPE Capital off-loading SpaMedica to Ober Scharrer, a platform business backed by Nordic Capital, in March.

“Pharma, medical & biotech deals are thriving at levels roughly comparable to pre-pandemic times. Most are fuelled by market and innovation potential of the acquisition targets – with their prospects being even more critical to deal decision-making in the current climate,” Ellen Gielen, partner at law firm CMS, noted in a recent report.

Source: Private Equity News

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