R.P. SCHERER SELLING PACO PHARMACEUTICAL TO GALEN PARTNERS

R.P. SCHERER SELLING PACO PHARMACEUTICAL TO GALEN PARTNERS under a definitive agreement announced Feb. 21. Galen, a New York- based venture capital firm specializing in the buyout of health businesses, is paying approximately $40 mil. for contract manufacturing and packaging firm Paco. The purchase price, which includes cash, equity securities of the new entity and assumption of debt, "is subject to adjustment at closing," Scherer said. The new entity being formed by Galen to buy Paco will continue to operate the business from its facilities in Lakewood, New Jersey, Chicago and Puerto Rico. Scherer has been trying to sell Paco for several years. In February 1990, the firm announced that Paco would be acquired by an investment group headed by Paco management, also for about $40 mil., but that deal later fell through. Scherer classified Paco as a discontinued operation in the second quarter of 1991, taking a write-off of $16.7 mil. ("The Pink Sheet" Aug. 19, p. 9). Scherer acquired Paco in 1988 for about $64 mil. In a separate capsule manufacturing deal, Lilly announced on Feb. 20 a nonbinding agreement transfering ownership of its Qualicaps empty capsule manufacturing business to Shionogi & Co. of Osaka, Japan. Shionogi and Lilly have operated a capsule-manufacturing joint venture in Japan for the past five years. Shionogi will assume full ownership of that operation, as well as five others Qualicaps operations located in Indianapolis, France, Spain, England and Mexico. The division manufactures a wide variety of empty capsules and employs 600 people. In return, Shionogi will transfer to Lilly marketing rights in Japan for Humulin as well as make an undisclosed cash payment. Lilly would be the sole promoter of Humulin by July 1, 1996. A definitive agreement is expected in a few months.