Bowtie German Bidco GmbH (Nextpharma)

Overview Key strengths Key risks Solid revenue visibility, with contract length averaging three years. Limited scale in the contract development and manufacturing company (CDMO) market. Good product diversity and broad range of dosage forms, with dedicated manufacturing sites. The CDMO market remains fragmented and highly competitive. Long-standing customer relationships and diversified customer base. Lack of exposure to more complex and profitable technologies (such as injectables and biosimilars). Good manufacturing footprint with nine sites across Europe. Limited pricing power restrains negotiations with customers. Adjusted EBITDA of about 16%-17% in 2022 in S&P Global Ratings' base case, supported by some pass through of material costs. Geographical concentration in Europe with no manufacturing footprint in the U.S. No debt maturities until 2028. High

...We expect Bowtie German Bidco GmbH (Nextpharma) will generate about 320 million-325 million of revenue in 2022, despite some uncertainty and delays on technology transfers. For 2022, we expect the group's revenue to increase 10%-11%, spurred by capacity ramp-up at some of its facilities (in Germany and Austria), new business already won from the Tampere acquisition, and the full growth effect from two newly integrated Lonza manufacturing sites. However, we note that the company's budget for 2022 is lower than previously communicated, mainly due to projects with customers that are on hold (delays in audits and tech transfers) and more conservative orders for some products (antibiotics and cough and cold medicines) from partners. This is reflected in our updated base case. Nevertheless, we forecast a partial recovery in 2023 with 9%-10% growth, as the effects of the pandemic ease and capacity orders ramp up. We assume Nextpharma's profitability will remain stable in 2022, compared with 2021,...

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