Advantage Capital has made an investment of almost USD3.6 million investment in RXQ Compounding, an FDA-approved outsourcing facility in Ohio that manufactures medical formularies and medications used in physician offices and hospitals across the US.
The investment, including USD1 million in equity under the Ohio Rural Business Growth (RBG) program, will help RXQ expand its new Albany manufacturing facility, increase research and development, and create as many as 100 jobs. In an area where more than one in every four people is unemployed, job creation of this magnitude shows the significant impact the RBG program will have on Ohio’s rural communities.
“RXQ is a perfect example of what the Ohio Rural Business Growth program was designed to do: ensure businesses in our rural communities have access to the capital they need to grow and promote economic development,” says State Representative Jay Edwards. “The company’s extensive job creation and expansion is the exact impact we are looking for, helping to create investment, opportunity and economic vitality in our small towns and rural communities that have too often been left behind.”
This first investment in the RBG program comes at a time when traditional private equity funds have historically overlooked opportunities to invest in rural America. Since 2000, only 1 per cent of venture capital has been invested in rural small businesses.
“We are passionate about growing the company in Ohio and developing a robust workforce in Athens County,” says Ed Zatta, CEO of RXQ. “This investment is critical to our expansion and ability to not only increase R&D, but also create 100 new high-paying jobs in our community. We fully expect to become the largest employer in the county, offering highly accessible jobs and investing in training to ensure our employees gain the foundation necessary to succeed in a growing industry.”
Founded in 2015 out of the Ohio University Innovation Center, RXQ is focused on addressing the growing demand for compounded pharmaceuticals. Many of its medications are everyday products required for patient care, such as the local anaesthetic lidocaine. The company currently ships to 38 states and compounds more than 160 formularies, all of which are in high demand in hospitals and clinics.
Compounding facilities are one of the fastest growing areas in the healthcare industry, due to the rise of chronic diseases and increasing need from patients that cannot be treated with mass-produced FDA-approved medications. In 2002, less than 20 per cent of hospitals elected to outsource any compounding needs. By 2017, 75 per cent of hospitals were outsourcing these needs, and demand continues to grow.
“We are excited to expand our portfolio in Ohio and help move the state’s economy forward through innovation, business expansion and job creation. With RXQ, we utilised our full toolkit of investment capabilities to support the company’s growth plans, and we applaud its success and commitment to creating local jobs,” says Chris Harris, senior vice president at Advantage Capital.
Along with the Ohio RBG program, the investment was also made in connection with the federal New Markets Tax Credit program. Both were designed to increase the flow of capital into disadvantaged communities, growing businesses and creating jobs and opportunity in areas where access to capital and private investment is hard to find.
“By partnering with state and federal economic development programs, we’re able to provide both cost-effective debt capital and flexible, long-term equity capital to meet the unique needs of companies like RXQ. We are excited to replicate this investment model in support of other rural businesses across Ohio that need growth capital,” says Harris.
