Growth Journey: Penn Pharma

Our relationship with south wales based pharmaceutical manufacturing business penn pharma started in 2007 and concluded in 2014 following the sale to us-based packaging coordinators inc., a world leading packaging services provider.

During the course of this seven year investment the Penn team faced a number of challenges but this investment case exemplifies the value that a long-term private equity backer with the flexibility to support further investment can bring to a business; ultimately helping Penn to be recognised as a leading player within the global pharmaceutical manufacturing market.

In 2003 LDC invested in a business that had grown, had significant future potential and of most importance had capabilities within the business to make huge strides in the pharma manufacturing sector. The key was one of creating distinction and differentiation in a competitive space. With our support a new management team led by Dr Richard Yarwood, along with the continued support of outstanding non-executive chairman, Mark Molyneux, provided the catalyst to redevelop Penn’s growth strategy.

We worked alongside this highly talented team to enhance the business’ capabilities as a manufacturer of highly potent drug products, and with additional backing from LDC, Penn opened a new £14m world-class manufacturing operation in 2013, specifically to drive growth in this technically-demanding area.

An investment in cutting edge technology at the facility represented a significant milestone in Penn’s expansion and development, effectively providing the business with unique capabilities to develop and manufacture specialist drugs and hard to handle compounds for the worldwide pharmaceutical market. This provided Penn with a clear strategic advantage over a number of its international rivals, resulting in a significant uplift in new potent drug manufacturing contracts with key international customers.

During our investment period, Penn increased its annual turnover from £17m to more than £30m for the financial year ended March 2014, with EBITDA up 51 per cent in the same period. This rate of growth was principally driven by high potent revenues. Penn also invested substantially in the quality and size of its workforce – growing to 300 people, a 47 per cent increase since 2007, enabling it to target, win and manage more complex projects.

Penn’s transformation into a world class provider of potent medicines has also resulted in a number of significant award wins, including the world renowned ‘Facility of the Year Award’ from the International Society for Pharmaceutical Engineering (ISPE). This coveted award reflects Penn’s position within the global market, as a business which now sets a high standard for pharmaceutical facilities of the future.

After a seven year tenure, we completed the sale of Penn in a £127m transaction with USA-headquartered Packaging Coordinators Inc. The exit delivered a money multiple return of 2.9x on our total investment – and provided Penn with another opportunity, through its new parent, to consolidate and further build upon its position in the sector.

Penn’s growth and expansion into a unique, market-leading and award winning manufacturing pharmaceutical company based in South Wales, with a global customer base, a cutting edge manufacturing facility, and a growing specialist workforce is undoubtedly one of LDC’s greatest success stories.

Mark Molyneux, previously Non-Executive Chairman, Penn Pharmaceuticals : “What particularly impressed me about LDC’s involvement with Penn was their willingness, when presented with a compelling business case, to support management and invest in the expansion of the business. That investment resulted in the growth of new services and clients, and created a business set for further rapid expansion, to benefit the acquirer.“Penn is also one of the best examples of ‘business transformation’ I have encountered. Management planned and implemented a successful change of strategy, operations and culture at the company, with the challenging, but unswerving, support of LDC.”

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by Sophie Reed

Notes to Editors

  1. LDC is the private equity arm of Lloyds Banking Group and is authorised and regulated by the Financial Conduct Authority.  
  2. LDC backs ambitious management teams from UK-based medium sized companies seeking up to £100m of investment to fund management buyouts or development capital transactions.
  3. LDC invests in a broad range of sectors and has particular experience in Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure, Support Services, Construction & Property and Financial Services.
  4. LDC has a UK regional network with locations in Aberdeen, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Newcastle, London, Manchester, Nottingham and Reading.