Water Street acquires pharmaceutical development division of AAIPharma

US private equity firm Water Street Healthcare Partners has made its first acquisition in the life sciences sector by buying AAIPharma's pharmaceutical development division.

Chicago-based Water Street has committed up to US$75m (Euro 53m) in equity financing to expand AAIPharma's business capabilities.

The new pharmaceutical development company will be called AAIPharma Services and keep its headquarters in Wilmington, North Carolina. It serves more than 300 large pharmaceutical and biotechnology companies throughout North America. Its team of 450 scientists and professionals specialise in services that encompass the entire process of pharmaceutical drug development. Its primary areas of expertise include analytical chemistry, formulation development, clinical packaging, oral drug delivery and contract manufacturing.

"In addition to providing significant capital resources, Water Street offers extensive pharmaceutical expertise that will benefit our company, employees and customers as we embark on a new strategic course," said Lee Karras, who has led the pharmaceutical development business since 2006 and has now been appointed as ceo of AAIPharma Services.

"The rising complexity of drug development and the costs related to maintaining those capabilities in-house are leading global pharmaceutical and biotech companies increasingly to turn to outside resources for assistance," said Al Heller, an operating partner at Water Street.

Tim Dugan, managing partner of Water Street, said AAIPharma Services is much better positioned to focus on and expand its core business as a stand-alone entity.

"We will leverage our team's deep expertise and relationships in the pharmaceutical industry to build on its strong foundation through a combination of organic growth and strategic acquisitions," he said.