Laboratoires Delbert, a Parisian lab founded in 2002, was acquired by Marc Childs & Thierry Hoffmann in 2013 The laboratory is specialized in the maintenance and acquisition of essential and major drugs, as defined by the World Health Organisation. Laboratoires Delbert’s expertise is in the security of production chains, limiting disruption risk to supply and acting as reference partner for regulatory agencies and large pharmaceutical companies.
Vivalto Partners, an investment management company active in French healthcare, was founded in 2021 by Vivalto Sante founder Daniel Caille. The investment will allow Laboratoires Delbert to move forward in a new stage of development. It will also support its rapid growth internationally and help to address drug shortages. Vivalto Sante and Laboratoires Delbert have both declared their goal to be recognised in the near term as mission-driven companies.
LPA-CGR attorneys advised Laboratoires Delbert in this secondary LBO. The team included partners Raphael Chantelot, Mathieu Seva-Roudon and associates Maxime Poonsan, Celine Gui and Deborah Thery.
Lawyer Monthly spoke with Raphael Chantelot, Mathieu Seva-Roudon and Partners at LPA CGR avocats for more insight on this transaction.
Please share with us the background of this transaction and the role played by your team.
Raphael says that certain medicines and drugs are important for public health. These medicines were all created by R&D carried out by “big pharma” companies many years ago. Now, these companies are changing their way of operating. One thing is that R&D is decreasing. The marketing of these products is also not done anymore, as the market and profit pool are too small. They are dumping these products and it is a problem for the patients because they need these drugs in order to survive.
Smaller laboratories, like Laboratoires Delbert, can now take on the production and sale of these drugs at affordable prices to meet the needs of the general public. The two founders have a passion for providing drugs and services to patients. It is because of this that it is such a pleasure to be able to work with these two founders, as well as how they managed to convince investors to invest in them.
Mathieu: Exactly. Since many years, we have been assisting Laboratoires Delbert. In 2013, the founders aimed to establish a French leader within the essential medicine industry. Raphael stated that big pharma has slowed down the production of essential pharmaceutical products. In France, at least, legislation favours innovative companies because new products with better health effects can be sold on the market for a higher price. It is for this reason that big pharma purchases biotechs and medical technology. They buy innovation and sell the new products. The mature products are sometimes discarded, despite being cheaper and still beneficial to health.
Laboratoires Delbert has become a prominent player on the French market. The company’s valuation has increased significantly since the transaction, compared with 10 years ago. This proves that socially-oriented activities can have value.
What unique skills and experience did you bring to this transaction?
Mathieu : In France, taxation is a very complex issue. We also assist them with R&D tax credit generation. In this private equity deal, I was responsible for the tax aspects of both the management package as well as other tax issues in relation to the founders. This secondary LBO is quite complex, with multiple investors and different types securities. It requires a lot post-transaction structure. In France, tax issues affect individuals, companies and investments. The client wants the tax aspects to be handled with care and in compliance with the law.
Raphael : My work involved implementation, helping to organize contributions, sales and shareholders’ agreements, as well as coordinating with debt fundraising. All the funds involved in previous rounds reinvested, which is quite impressive. Vivalto, a newly formed investment firm that is very active in healthcare, was at the table as well. It was also necessary to refinance pre-existing debts, so the transaction was quite complex.
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What impact could this transaction have on the French healthcare industry?
Raphael : Going back to that trend we discussed earlier, this is my opinion that it’s a signal for the market to tell investment firms in the healthcare industry to retarget the laboratories that perform this important function. Investment firms are attracted to firms such as Laboratoires Delbert because of their marketing and ESG. The symbolic value of the laboratory is also good for smaller labs in France, since other firms are likely to invest into similar laboratories that perform the same important role for the healthcare sector. This will bring together funders who are willing to support the mission of laboratories.
Mathieu : I think this is a very emblematic deal on the French Private Equity market, as the Life Sciences and Healthcare sector has become more regarded by investors. This transaction demonstrates that investment firms are eager to invest in companies of this kind. This transaction highlights the current drug shortage because Laboratoires Delbert’s activity is to bring medical products back on the market.
Raphael : The shortage in France is becoming more acute, after the COVID crises showed that even common drugs like aspirin or paracetamol are in short supply. Since then, the French government has realised that the big pharma industry is not performing its role in ensuring the supply and availability of essential and basic medicines. It has therefore decided to encourage the industry to invest back into France and to establish French production facilities. The public is very interested in transactions like these.
Mathieu : Laboratoires Delbert is also renowned for its expertise in securing production chains to mitigate the risk of disruptions to supply. The company has established itself as a partner of reference for regulatory and healthcare authorities.
We assisted Laboratoires Delbert with a prior fund raising to finance their external growth ambitions. This was done in parallel to the purchase of Lepticur, a major antiparkinsonian medication, from SANOFI AVENTIS, in 2020. This contribution of EUR20 million of equity was supplemented by unit-branch financing provided by BPIFrance and CIC Mezzanine, also for EUR20 million, which gave the laboratory the means to accelerate the pace of acquisition of new marketing authorisations as well as its internationalisation.
Investment firms are interested in firms such as Laboratoires Delbert because of their marketing and ESG.
LPA-CGR avocats helped Laboratoires Delbert acquire TERALITHE LP (400mg) extended-release scored tablets and TERALITHE LP 250mg scored tablets from SANOFI. They also assisted with the financing. The company continued to invest in major therapeutic medicines (MITMs) and strengthened its execution strategy to ensure that essential medicines are available for patients.
What additional services does your company offer in the health sector?
Raphael: We support pharmaceutical laboratories as well as drug and medical device producers, healthcare service providers, investment funds, entrepreneurs, and public and private health institutions.
LPA-CGR is a top independent law firm in France with more than 230 lawyers and 12 offices including 11 overseas. They offer a wide range of services, in many different business sectors including healthcare, in all of the major areas of business law. That is why our cross services offer includes IP/IT, distribution, litigation, corporate law and M&A, tax law, labour law, public law and regulatory/compliance, in France and abroad.
Mathieu : Our team of 15 life sciences lawyers are deeply committed to the healthcare sector to meet our clients’ needs. Morgane Morey will be joining us in November 2022. We have strengthened our approach to the market with the integration of regulatory aspects.
Morgane has worked for over 10 years in regulatory matters relating to health and health products. This includes medicinal products, medical equipment, cosmetics, and food supplements. She has gained expertise on legal and regulation counselling, contracts, and audits. She is also involved in commercial litigation and product liability.
Morgane, for example, is working on a number of issues, including a dispute over a ANSM ruling on the ban of HHC, and is assisting a new client in criminal proceedings.
What makes your company different from others?
Raphael : We’re involved in a variety of health initiatives. The team, for example, is a member of France Biotech. This association was founded in 1997 and brings together innovative entrepreneurs from the HealthTech sector, as well as their experts partners. France Biotech has as its primary mission to promote the growth of this industry in France. We are members of many committees.
Mathieu : We also have a strong relationship to unions in the sector (LEEM SNITEM GEMME AFAR etc.). Mathieu: We have a strong relationship with unions of the sector (LEEM, SNITEM, GEMME, AFAR etc.).
Raphael : The life sciences/healthcare area is one our development priority sectors. We are doing everything we can! LPA-CGR Avocats wants to be at the core of their clients’ strategic decisions by offering them a cutting-edge, comprehensive life sciences and healthcare package.