At the beginning of the year, a European concern was quietly closing on its acquisition of Wichita’s JCB Laboratories, a high-tech sterile pharmaceutical compounding company that its top executive said has seen significant revenue growth over the past two years.
The acquisition came to light publicly this week following the publication of a Treasury Department report that highlighted the northwest Wichita company.
“We are not moving locations,” JCB president Brian Williamson said in an interview this week. “That was part of the deal, that JCB is staying here in Wichita. We are possibly looking at an expansion project here.”
Williamson and three other partners sold the company to Fagron, a 24-year-old pharmaceutical compounding company based in Rotterdam, the Netherlands, that operates in 30 countries.
Williamson declined to disclose financial terms of the transaction, which includes an arrangement that he remain JCB’s president for three years, he said.
Williamson, Kent Richardson and two unnamed partners owned the company that was launched in 2002. From its 8,100-square-foot building at 7335 W. 33rd St. North, the company compounds sterile drugs and solutions to health care providers across the country.
He said JCB’s gross revenue increased 50 percent between 2012 and 2013, and it’s on track to grow another 60 percent this year.
Williamson attributes much of the revenue growth to federal regulations signed into law last fall governing compounding pharmacies. The regulations followed a meningitis outbreak in 2012 that killed 64 people and made more than 750 people sick. The outbreak was traced to contaminated steroid pain injections produced at a now-closed Massachusetts compounding pharmacy.
Williamson said JCB’s decision to voluntarily register with the Food and Drug Administration as an outsourcing facility – and subject itself to federal inspections – helped it gain new business from health care providers.
“There are not many pharmacies that have done that or (they) have gotten out of it (compounding),” he said. “We’re going to see more and more market share as more people continue to get out of the business.”
Under the new regulations, larger compounding pharmacies can voluntarily register with the FDA and have federal inspections, while smaller pharmacies remain under the supervision of state boards of pharmacy.
Employment at JCB has grown concurrently with revenue. Williamson said JCB now has 35 employees, up from 25 last December. It also is in the process of hiring four more people: a financial controller, senior quality assurance manager and two pharmacy technicians. The bulk of its workforce comprises pharmacists and pharmacy technicians, who generally have four-year college degrees in chemistry. We provide “significant salaries, and that’s what the state wants to see.”
JCB’s business, growth and receipt of State Small Business Credit Initiative funds led to a briefing and tour of its facilities by Treasury officials a month ago. JCB received a $63,000 loan from NetWork Kansas through the SSBCI for its relocation to its larger and present building in 2011. Treasury oversees the distribution of SSBCI funds to the states.
Corey Mohn, NetWork Kansas’ director of statewide programs, said Treasury “had seen a lot of anecdotal and statistical evidence we were doing a good job as part of that (SSBCI)” and wanted to send some staff to visit Kansas to see companies that had used SSBCI funds. Mohn said he included JCB as part of Treasury’s tour of six Kansas firms using SSBCI funds.
The end result of the visit was that Treasury spotlighted three SSBCI recipients in its quarterly report released this week, and JCB was one. The other two were firms in Washington and California.
“They (JCB) are just an unbelievably innovative company in our backyard, an example of the type of company that we need more of not only in Wichita, but in Kansas,” said NetWork Kansas CEO Steve Radley, who attended Treasury’s visit to JCB.