DPx, the combination of Patheon and DSM Pharma, will catch the countercurrents in contract manufacturing

The merging of Patheon and the pharma assets of DSM International, first announced last fall, has been completed with the naming of the new entity: DPx, to be headquartered in Durham, NC, and headed by Jim Mullen, current president of Patheon. DSM, a giant, global chemicals and materials company, will own 49% of the venture, and JLL Partners, a private-equity firm, the remainder. DSM contributed its pharma assets (DSM Pharmaceutical Products, which includes the Banner Pharmacaps business acquired in 2012, and DSM Fine Chemicals), and received approximately $190 million from JLL Partners. JLL, a major owner of Patheon, contributed an additional $310 million, for a total investment of $500 million.

The combined entity has 24 locations across North America, Europe, Latin America and Australia with more than 8,000 employees.

As consolidation in healthcare, in the US at least, generates consolidation among Big Pharma firms (such as the recent Actavis-Forest Labs announcement), so it creates a demand for Big Contract Pharma. According to industry reports, however, contract manufacturing is getting hammered by the same cost pressure as the rest of the pharma industry. At the end of last year, Ben Venue Laboratories, a CMO owned by Boehringer Ingelheim, announced it was closing its doors in the face of the capital investments needed to resume sterile injectable manufacturing (about which it’s worth noting that DPx has a sterile injectables facility in Greenville, NC). DPx hopes to catch the trend of providing development as well as manufacturing services, a feature of Catalent, Almac and other CMOs. Meanwhile, although contract and generics manufacturing hasn’t abated its shift to India, China and other emerging markets, there is heightened attention on the quality control for products coming out of those markets.

"Starting today, we are better positioned to add scale, new value chain capabilities and technologies, as well as expand our end-to-end service offerings to our customers," said DPx's Mullen, in a statement. "We will lead the way in changing how services are purchased by our customers and in doing so we will create great value for our customers and enhance our leadership position. This key strategic principle will drive future growth and position us as the global leader in the CDMO industry, with offerings unmatched by our competitors."