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North East pharma firm secures GBP32.5m funding package

Management at Quantum Specials, one of the UK’s largest suppliers of tailor-made medicines to the pharmaceutical industry, has completed a buyout supported by a GBP32.5m funding package fr

Management at Quantum Specials, one of the UK’s largest suppliers of tailor-made medicines to the pharmaceutical industry, has completed a buyout supported by a GBP32.5m funding package from mid-market private equity house LDC and Yorkshire Bank.
 
Based in Burnopfield, County Durham, the business produces ‘specials’ – bespoke drug formulations which are not readily available from drug manufacturers. It supplies wholesalers, pharmacies, chemists, dispensing doctors, hospitals and veterinary surgeries across the UK.
 
LDC has invested GBP14m in Quantum Specials through a combination of loans and shares. A management team, led by managing director Ian Edge, has also invested in shares in the company.
 
The transaction was supported by a GBP18.5m package of senior debt and working capital facilities from Yorkshire Bank Corporate and Structured Finance.
 
John Swarbrick and Alex Bowden led the deal for LDC, with Swarbrick taking a seat on the company’s board.
 
The deal follows other LDC investments in the pharmaceuticals sector including Aesica Pharmaceuticals and Penn Pharmaceutical Services and is part of the LDC’s strategy to invest GBP250m of new equity in 2009.
 
The buyout provides an exit for corporate shareholder Phoenix Medical Supplies and a number of the founding shareholders.
 
Quantum Specials was set up in September 2004 by four former managers of the Unichem-owned Eldon Laboratories.  
 
Ian Edge, managing director of Quantum Specials, says: ‘After nearly five years of rapid growth, this deal comes at a crucial time in our development and will bring on board the expertise and financial backing we need to take the business forward.
 
‘The buyout will help us further enhance our customer service levels, something which has been the bedrock of our success. It also provides us with a strategic investor with whom we can work closely to explore new routes to market.
 
‘With a strong track record of investing in the pharmaceutical industry, LDC has demonstrated a clear appreciation of our sector and John and the team took the time to understand what our aspirations are for the business and to structure an appropriate deal based on these.’
 
Swarbrick adds: ‘In a relatively short space of time Quantum Specials has built a strong company based on a superb quality of service and outstanding customer relationships.
 
‘Current demographics suggest that the market for Quantum Specials’ services will continue growing over the coming years and the business has the capacity, expertise and ambition to make the most of these opportunities.
 
‘We’re looking forward to working with management to provide the strategic focus and enhanced operational performance which will help deliver further growth.’
 
LDC has a number of investments in the pharmaceutical sector including North East-based Aesica, a supplier of active ingredients to major drug producers around the world.
 
In 2007, LDC completed the GBP67m buyout of specialist outsourcing firm Penn Pharmaceutical Services, a provider of pharmaceutical development and custom manufacturing services to the international healthcare industry.

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