SBL Vaccines re-invigorated by 3i’s investment
Backed by 3i since 2004, SBL vaccines has successfully grown into one of Sweden’s leading vaccine developers and distributors. In a deal worth €39.4m, it has been sold to NASDAQ-listed Dutch biotechnology company Crucell.
SBL's core product is a patented oral vaccine that protects against cholera and diarrhoea, something every seasoned traveller knows has the potential to wreck a well-planned holiday. Developed in 2004, the product, which is sold under the brand name Dukoral, is now available in more than 50 countries worldwide and generated €14.7m in sales in 2005. When 3i first became aware of SBL in 2004 it was a division within a larger pharmaceutical corporation. The parent company, Chiron, had decided that the division was not strategically aligned to its core business strategy and was seeking a trade buyer.
3i immediately recognised the latent potential of the company and entered into talks with the incumbent management team. Thomas Pollare, 3i Partner, explains: “We decided to invest in SBL Vaccines for two main reasons. Firstly, the company had just developed Dukoral and we could see its potential as a product. Secondly, SBL already had an extensive agent and distribution network in the Nordic region that could be leveraged more effectively.” The company also owned a state-of-the-art production plant which during the due diligence the 3i team identified as key corporate asset – the barriers to building such plants are prohibitively high in Scandinavia.
Proven industry knowledge and expertise
During the bid process SBL considered proposals from several investors, however they chose 3i because of its experience and commitment to the healthcare sector. 3i has a portfolio of healthcare companies worth over €800m, and recent sector deal success with the restructuring and sale of betapharm to Indian company Dr Reddy’s. Furthermore, all of the investors on the deal team had a background in the pharmaceutical and vaccine industries. Once the deal was completed, 3i set about restructuring the company’s cost base.
A new CFO was introduced and tasked with creating a new financial structure for the business and to keep a close eye on expenditure. Over the following year, management ramped up production at the main plant and started distributing products from other manufacturers. A concerted effort was made to promote Dukoral internationally. Pollare says: “When we acquired SBL, Dukoral had not been marketed at all. We set about selling the product in different European markets and then expanded into Asia. Within six months the product was making a profit, and last year sales topped €38m. The Company generated good returns and a dividend was given to shareholders already 12 months post investment.”
Choosing the right partner
In 2006, 3i decided to seek an exit and started talks with a number of pharmaceutical companies. During its ownership, 3i had developed the business into a major player in the Nordic pharmaceutical industry, but to take SBL to the next level of growth, the backing of a major corporation was needed. The sale to Crucell was a great result for both parties. Crucell acquired a company with a market leading product and an extensive sales and distribution network in the Nordic region, whilst 3i made an 18x money multiple on its investment and an excellent IRR of 245%.