Ahead of sale, Albany Molecular Research Inc. CEO explains why

Monday, July 3, 2017

Source: Buffalo Business First

Bill Marth has engineered seven acquisitions since he became chief executive of Albany Molecular Research Inc. three and a half years ago.

Now, the former head of generic drug maker Teva Pharmaceutical's North American and South American operations is orchestrating his biggest move since taking the top spot at the Albany region's third-largest public company. AMRI expanded to the Buffalo Niagara Medical Campus under the Buffalo Billion initiative.

Marth is preparing to sell the drug development company to help transform Albany Molecular into region's next billion dollar business. 

The Albany Molecular board voted unanimously this month to sell the company to The Carlyle Group of Washington, D.C., and Chicago private equity firm GTCR LLC. The deal, worth $21.75 per share, is equivalent to more than $900 million. The sale, which still needs regulatory approval, is expected to close in the third quarter of this year.

"You have to understand our goal of being a billion dollar company ... was not about hubris that AMRI has to be a billion dollars because of our legacy," Marth said. "The billion-dollar goal was all about the fact that our customers for the most part are becoming larger and larger."

Four of the world's largest pharmaceutical companies have annual revenue between $35 billion to $50 billion, he said.

Many of those companies are investing heavily to outsource work to firms like Albany Molecular in the contract drug development and manufacturing industry. Contract drug development and outsourcing was a $71.5 billion industry in 2015 and is projected to reach $105 billion by 2021, according to Results Healthcare, a New York- and London-based pharmaceutical research organization that provides advice on mergers, licensing and strategy.

"Outsourcing has increased tremendously," Marth said. "You need larger suppliers to work with larger customers."

By selling Albany Molecular to Carlyle and GTCR, the company will have the resources it needs to push annual revenue beyond $1 billion and make it one of the five-largest contract development and manufacturing companies in the world, Marth said.

"We believe the investment and the focus by these two very fine private-equity companies will give us the fire power to continue that mission and maybe propel us much beyond a billion," Marth said.

When Albany Molecular co-founder Tom D'Ambra recruited Marth, they outlined a plan to position the company to take on more contract drug development work.

"AMRI always had a legacy for being able to do the tough chemistry work and the complex science," Marth said. "How could we extend that more into ... active pharmaceutical ingredients that pharmaceutical companies need?"

Albany Molecular (Nasdaq: AMRI) was founded in 1991 by chemists D'Ambra and Chet Opalka. The company developed the active ingredient for the allergy medicine Allegra and went public in 1999. The business has grown to 3,100 employees who operate 21 plants in seven countries.

Marth sees opportunities for Albany Molecular to expand by pursuing work in the development of injectable drugs, by working on cancer treatments and introducing biologic medicines in addition to synthetic drugs. Those are all areas where large pharmaceutical companies have invested heavily over the past few years.

"We wanted to build into this area," he said. "That's what fueled us over the last number of years to do the seven acquisitions."

Contract revenue has grown from about $210 million when Marth arrived in January 2014 to a projected $725 million this year.

"But we want to go further," he said.

"You really need to be able to do the work on a broader scale," Marth said. "All of these areas are important for us and this acquisition by Carlyle and GTCR comes with the commitment for considerable investment in AMRI to continue doing exactly this."

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