By Kristy Dorsey

Newly-established Scottish healthcare venture Kelso Pharma is eyeing up further “significant” acquisitions after snapping up Glasgow-based Stirling Anglian Pharmaceuticals in a multi-million pound deal.

Set up by former ProStrakan and Kyowa Kirin International (KKI) chief executive Tom Stratford, Kelso is backed by specialist healthcare investor Apposite Capital. The company and its private equity partner are looking to build a pan-European pharmaceutical business through the addition of further products and businesses.

“We haven’t got a defined number really, but there is certainly the expectation of doing another three or four deals of reasonably significant size,” Mr Stratford said. “Apposite were keen not to put a ceiling on the aspiration and I think the view was that if an idea was a very good idea, it could be funded in lots of different ways.

“We might do some smaller deals as well that could take the total number up, but we are expecting to be able to do three or four sizeable transactions throughout sort of a five-year period. Probably most of that will come in the first two or three years to build some momentum.”

Mr Stratford previously headed up Borders-based ProStrakan and became chief executive of KKI when its parent company, Kyowa Kirin, took over ProStrakan in 2011. He spent his last 16 months working for Kirin in the United States, returning to Scotland in March 2020 at the outset of the Covid pandemic.

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He is joined at Kelso by Allan Watson, previously chief financial officer of KKI, and former KKI general counsel Andrew McLean. He and his fellow directors are minority shareholders in the business.

“I was at ProStrakan and then what became Kirin for 25 years, and to be honest it became time to go and do something new,” Mr Stratford said. “I was looking forward to a fresh challenge of getting back to something small that we could grow, rather than being in a big organisation.”

He added: “Andrew and I were about seventh and eighth employees at ProStrakan when we joined that business back in 1997, and that business is now about a 500- or 600-person business across Europe, so I think in the next 10 years we expect to grow and expand [Kelso] both in people, products and geography. That’s what the fun part of the journey will be about.”

The purchase price to buy out Stirling Anglian majority owner Sean Perrie and other minority shareholders has not been disclosed, though Mr Stratford said reports of multi-million pound price tag were “fair”.

The Glasgow firm, which employs less than 10 people, already has three medicines in the UK healthcare market generating annual revenues of between £10m and £20m. They include a laxative, an anti-inflammatory drug and a vitamin supplement that are said to fit in with Kelso’s focus on cost-effective medicines of proven benefit to patients.

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Another new product from the Stirling Anglian portfolio is expected to launch in the first half of this year.

“Stirling’s products today go to primary care and secondary care across a number of different therapeutic areas,” Mr Stratford said. “They are very much focused on providing cost efficiency to the healthcare system, so these are branded products that have a good price point and they are essential medicine that many patients need to take.”

He added that there is no intention to “disrupt” the Stirling business.

“Sean as a director has stepped down and is helping us with the transition, but the rest of the team remain all in post and continuing to do the work they have been doing,” he said. “Maybe at some future date we will look at normalising names and structures, but there is no immediate urgency on that.”

While Mr Stratford and his fellow directors remain based in the Borders, where they are currently working from home, the company expects to establish an office presence in Edinburgh in the coming months.

Established in 2006, London-based Apposite Capital has 12 commercial stage healthcare companies from across Europe in its current investment portfolio.

“We are delighted to be partnering with such a talented and proven team of executives given their phenomenal track record in executing acquisitive and organic growth in their specialty pharmaceuticals sector,” Apposite managing partner Sam Gray said.

“Given its growth profile, the acquisition of Stirling Anglian represents an attractive first entry point into the UK market and we share the ambition of the team to create a significant pan-European business with a focus on innovative affordable medicines.”