Water Street Healthcare Partners, aleading private equity firm focused exclusively on the health care industry,announced today that it has acquired the Pharmaceutical Development divisionfrom AAIPharma Inc. Water Street has committed up to $75 million in equityfinancing to expand the business’ capabilities with the goal of building itinto the leading provider of pharmaceutical development services. The newcompany is named AAIPharma Services Corp. The company, which will retain its headquarters in Wilmington, NorthCarolina, serves more than 300 large pharmaceutical and biotechnologycompanies throughout North America. Its team of 450 scientists andprofessionals specialize in services that encompass the entire process ofpharmaceutical drug development from discovery through commercialization. Itsprimary areas of expertise include analytical chemistry, formulationdevelopment, clinical packaging, oral drug delivery and contractmanufacturing. “We are thrilled to partner with Water Street to establish ourselves as anindependent company,” said L. Lee Karras, who has led the business for thepast 3 years and has been appointed the company’s CEO. “In addition toproviding significant capital resources, Water Street offers extensivepharmaceutical expertise that will benefit our company, employees andcustomers as we embark on a new strategic course. Together with Water Street,we will build on our core strengths to provide our customers with unparalleledknowledge and capabilities that will enable them to successfully navigate thecomplex drug development process.” “The rising complexity of drug development and the costs related tomaintaining those capabilities in-house are leading global pharmaceutical andbiotech companies to increasingly turn to outside resources for assistance,”said Al Heller, an operating partner with Water Street who has more than 30years of pharmaceutical experience including leading operations for G.D.Searle. “AAIPharma Services goes beyond traditional levels of support toprovide customers with unique expertise and capabilities that creativelyaddress challenges that arise during drug development and manufacturing. Thecompany is highly regarded for collaborating with customers to ensure theyconsistently achieve high-quality results. This is the unique valueproposition that we intend to build on.” AAIPharma Services is Water Street’s second platform investment in 2009and first investment in the life sciences sector. Tim Dugan, managingpartner of Water Street, commented: “We are pleased that Water Streetcontinues to complete investments in sectors of health care that we haveidentified as attractive for growth. Over the past 30 years, the AAIPharmaceutical Development business has consistently grown to achieve strongresults. As a stand-alone entity, AAIPharma Services is much betterpositioned to focus on and expand its core business. We will leverage ourteam’s deep expertise and relationships in the pharmaceutical industry tobuild on its strong foundation through a combination of organic growth andstrategic acquisitions. Ultimately, our goal is to create greater long-termvalue for customers and the company by establishing AAIPharma Services as theleading provider of drug development services.”
