Australia's Mayne Pharma is to buy Metrics, a privately-owned US-based provider of contract development services to the pharma industry in a deal worth up to $120 million.

Under the terms of the agreement, Mayne is initially paying $105 million, plus up to $15 million depending on how Metrics performs over the next year. The latter has 300 employees and has a client base of more than 100 pharmaceutical customers and offers "a vertically integrated model offering analytical services, formulation and commercial manufacturing".

The Greenville, North Carolina-based company also develops and manufactures niche generic drugs and has particular expertise in formulating complex oral drugs, "including highly potent and unstable compounds, controlled substances (eg opiates) and products with poor bioequivalence". Metrics also has a pipeline of 11 niche generic drugs, including two that have been filed with the US Food and Drug Administration.

Mayne's chief executive Scott Richards said that "in addition to providing scale in the US market, Metrics brings additional technical capabilities and material upside from cross-selling revenue opportunities". He added that "we have known Metrics’ senior management team for some time and they have a solid track record of success in the US generics industry".

In the fiscal year ended June 30, Metrics had sales of $51.6 million and earnings before interest, tax, depreciation and amortisation of $16.1 million. Mayne will fund the acquisition via a new $48.5 million debt facility (with the ability to tap into an additional $15 million) and a A$65 million equity raising.