Morningstar | Aptar Adds Capabilities to Its Competitively Advantaged Pharma Business; Raising FVE to $92
On June 10, Aptar announced its acquisition of Nanopharm and Gateway Analytical, two small pharma-oriented businesses that facilitate new product development. The move is compelling in our eyes, with potential long-term benefits that should easily exceed the fairly modest $50 million purchase price. Not only could this help to elongate the competitive advantages enjoyed by Aptar, but we also expect it to increase midcycle margins in the pharma segment. We've increased our fair value estimate to $92 per share from $89, and our narrow-moat rating is unchanged.Adding auxiliary services that reduce costs and increase the probability of success for in-pipeline drugs should be a meaningful value-add to Aptar's pharmaceutical customers. We believe some of those costs and benefits are likely to be shared with Aptar in the form of slightly higher profit margins for the segment over the long run.
Both Nanopharm and Gateway Analytical specialize in material science, along with drug and medical device analysis. We believe those skills will prove valuable complements to Aptar's expertise, which has historically been in both the FDA approval process and the intricate manufacture of inhaler devices. Together, these skill sets compose a significant portion of what many drug manufacturers require to launch a new drug in a dispensing device.
AptarGroup is a supplier of a range of dispensing, sealing and active packaging solutions for the beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets. The company's primary products are dispensing pumps, which dispense a spray or lotion from non-pressurized containers; closures, which are plastic caps that allow a product to be dispensed without removing the cap; aerosol valves, which dispense product from pressurized containers; and elastomeric primary packaging components, which include stoppers for infusion, antibiotic, lyophilization and diagnostic vials, pre-filled syringe components, as well as dropper bulbs and syringe plungers.
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