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Japanese food giant Ajinomoto strengthens Healthcare business with $620 million Forge acquisition

Ajinomoto, the Japanese multinational food and biotechnology corporation, announced on November 13, 2023, that it had reached a definitive agreement to acquire Forge Biologics, a three-year-old US-based startup that focuses on gene therapy development and contract manufacturing. The all-cash deal, worth $620 million, is set to close at the end of the fourth quarter of 2023. Centerview Partners LLC acted as the lead financial advisor, and Ice Miller LLP provided legal advisory services to Forge in this transaction, with additional financial advice from Chardan Capital Markets LLC. Once the acquisition is complete, Forge will function as a fully integrated subsidiary of Ajinomoto Co.

Ajinomoto is primarily known for its business in seasonings and processed foods, but it also has a healthcare segment that focuses on amino acid-derived drugs. Although Ajinomoto is already active in contract pharmaceutical manufacturing, covering small molecules, antibody-drug conjugates, and nucleic acid-based therapies, this acquisition marks its entry into the rapidly growing gene therapy market. This market was valued at $6.50 billion in 2022 and is projected to exceed $38.76 billion by 2032, demonstrating a compound annual growth rate (CAGR) of 19.60% from 2023 to 2032.

In 2023, Ajinomoto unveiled its 2030 growth roadmap, with a significant emphasis on the Healthcare business. Gene therapy is a pivotal component of Ajinomoto's growth strategy, alongside expanding its Contract Development and Manufacturing Organization (CDMO) services for oligonucleotide medicines, regenerative medicine, and antibody culture media. This all-cash deal will help them achieve this goal as they will acquire Forge's 200,000-square-foot custom-designed current Good Manufacturing Practice (cGMP) facility known as "the Hearth." It also involves the integration of over 300 employees based in Columbus, Ohio.

For Forge Biologics, this deal signifies a boost to their long-term growth in supporting gene and cell therapy clients globally. Upon completion, Forge will become a fully consolidated subsidiary of Ajinomoto Co. The gene therapy sector has become a focal point in the pharmaceutical industry, with Forge Biologics positioning itself as a key player. Securing $120 million in funding within a year of its inception allowed Forge to expand its capacity and workforce. The company specializes in manufacturing adeno-associated viral (AAV) vectors, crucial for delivering gene therapy to specific cellular destinations in the body.

This acquisition aligns with the ongoing trend of mergers and acquisitions (M&A) in the biopharma industry. In the previous month, Roche acquired Roivant subsidiary Televant Holdings for $7.1 billion, gaining the anti-TL1A antibody RVT-3101, developed for inflammatory bowel diseases. BMS made a $4.8 billion move for Mirati Therapeutics, aiming to deepen its oncology franchise. AbbVie purchased Mitokinin for $110 million, Eli Lilly invested $1.4 billion in Point Biopharma, and Kyowa Kirin acquired gene therapy developer Orchard Therapeutics for $387 million. This trend signifies the growing attraction of biotech giants towards gene therapy and the growing market confidence in biotech startups.

To conclude, Ajinomoto's strategic acquisition of Forge Biologics marks its entry into the burgeoning gene therapy market, aligning with a broader industry trend of M&A activities. This $620 million deal enhances Ajinomoto's position in healthcare and accelerates Forge's global impact in gene and cell therapy.

Written by: Mehak Mahajan

Sources: Reuters, Economic Times, Bloomberg, Fierce Pharma, Mergerlinks

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