Mark Bamforth’s M&A handbook contains a great piece of advice he used to grow Gallus BioPharmaceuticals

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By Dennis Seeds | [email protected]
Interview by Gregory Jones | [email protected]

Mark Bamforth remembers arriving in the United States in 2000 from his native Scotland — and receiving some powerful advice from his new CEO.

“I was working for the biotech company Genzyme — and the day I arrived he told me that Genzyme was going to buy another company and the investment was one-fifth of Genzyme’s value at that time, so it was a pretty big deal.

“When I asked him why it was right to do this he said, ‘Well, we think we know enough to know that we should do this. But if we wait until we’re certain, then somebody else will have done it.’”

That advice gave Bamforth some insight he would never forget.

“It made me realize that you need to evaluate things and assess risks and potential, but you can’t wait until there’s no risk, because if you do, the opportunity will have gone one way or another.”

That major acquisition at Genzyme would be followed by a dozen more — a few in Asia, but most in the United States and Europe, covering different types of biologic manufacturing and medical devices.

When Bamforth and Genzyme tried to acquire a site in St. Louis from Centocor Biologics LLC, a Johnson & Johnson company, it didn’t work — twice. The incidents led him to take an introspective examination into where he was on the ladder of success.

“I was at a point in my career when I was looking for what was next — I wanted to run a company and have that experience,” he says.

The opportunity for Bamforth to set up his own business had arrived. He asked Johnson & Johnson to sell the Centocor site to him. Johnson & Johnson agreed, and Bamforth raised the money. Taking the Scottish word for brilliant and impressive, Bamforth founded Gallus BioPharmaceuticals LLC, becoming president and CEO.

“The rest, somewhat, is history,” he says, “Since that start, we’ve more than doubled the workforce to 350.”

Gallus is a pure-play contract manufacturer, meaning it only offers contract manufacturing and doesn’t have any of its own products; it doesn’t compete with its customers.

Here’s a look at how Bamforth evaluates business potential to drive growth and revenue of $50 million to $100 million a year.

It’s the fit and execution

Many new businesses are founded with having only one customer. If that customer does enough business to keep you afloat, you’re fortunate. But one day, you will probably realize that it’s not wise to depend on only one customer — and you must grow and diversify your organization.

“On day one, Johnson & Johnson accounted for all our business,” Bamforth says. “So part of our requirement really has been to grow the business in order to diversify our client base.”

Once you clearly identify your objective, you build your strategy. His vision was to make Gallus the most trusted provider of world-class contract manufacturing and development services for the pharmaceutical and biotechnology industry.

Bamforth decided it all boiled down to two steps that, if successful, would accomplish that vision.

“First of all, a good acquisition has to ‘fit’ with the company’s needs,” Bamforth says. “That’s having the right technology available, the right skill of manufacturing and the capacity available.

“So the right fit with those clients — all that is backed up by having in place the right quality systems. That’s a prerequisite.”

The next key is execution, and proving that with the acquisition in place you are able to deliver the goods as promised.

“Some of our clients are smaller biotechs, and the molecule we create really is their baby — it’s incredibly important for it to be able to help patients,” Bamforth says. “So it is a tremendous position of trust. Having the right fit, then executing on the programs, delivering materials on time with the right quality are essential for their program and fulfilling their mission to help patients.”

Do your due diligence

Besides partnerships and organic growth, the mother lode of growth opportunities is in acquisitions. It doesn’t hurt to be somewhat opportunistic. Should a company come on the market that would be worth your review, follow Bamforth’s advice: You can’t wait until there’s no risk, because if you do, the opportunity may be lost.

“I think it starts with that initial diligence phase of really trying to understand the business that’s in place. So, what is the revenue? What’s that based on? Who are the clients? How diversified is that client base? And how good a fit is it with what you’re trying to do?”

What makes a merger or acquisition a good fit is that it fills a gap in the company, creating an expansion in its products, workforce or abilities. Another measure is if it helps the company enter a new market, and thus creates a new revenue stream.

“We have a lot of capability for organic growth at Gallus, but we’ve also been actively looking at M&A opportunities over the last couple of years,” Bamforth says.

So when Gallus was reviewing possible acquisitions recently, it came across Laureate Biopharmaceutical Services Inc., which was in the same space as Gallus.

“They were a pure-play contract manufacturer and they had very strong development and clinical manufacturing, but they had very limited commercial manufacturing,” Bamforth says.

“Their real requirement was to find a way to be able to put in place commercial manufacturing so that the clients they’ve been working with, as their molecules mature, continue to be clients.”

The acquisition was a good one, since long-term sustainability would come from its long-term commercial relationships, not the clinical relationships that may only last a few years, Bamforth says.

“This is a very good match because combining Laureate with Gallus more than doubled our pipeline of client molecules that we’re working on,” he says, including process development and clinical drug substance manufacturing capacity. “So it increases the number of molecules that are likely to mature to be commercial and create that long-term sustainability.”

Bamforth says the Gallus team members realized early that they would want to keep the facility in place.

“This wasn’t a question of how to somehow strip them out of business; this was a question of keeping the current facility and organization in place to continue to drive business growth,” he says. “And sometimes an element overlooked is trying to understand the culture and the cultural fit of the organization.”

No two companies have the same cultures, and some can be very different.

“It can be hard to meld those cultures together,” Bamforth says. “Sometimes acquisitions are done and the company being acquired is treated as though it’s broken and the new company comes in and imposes a lot of things that can cause upset to those who have been in place and who felt that things were working well. Understanding the culture and how to meld the two organizations, I think, is really a critical area to effect.”

Staying on track

Now that your merger or acquisition is complete, it likely won’t be your last. You will have, hopefully, broadened your offerings to clients and will have a better chance of meeting client requirements.

Gallus continues to look for companies similar to Laureate, but also for opportunities to add additional platform technologies.

“We continue to look for the right kind of opportunities to add a new technology platform,” Bamforth says. “I think that to rely solely on organic growth is potentially risky.”

Gallus has looked at a number of opportunities over the last few years, either businesses that were being sold or facilities that have been sold by larger companies on a piecemeal basis. Bamforth says it’s valuable to examine the client base of your acquisition or merger target; you might find out something about your own industry.

“One of the things that we were somewhat surprised about was that with the Laureate client base, there wasn’t a high overlap between their clients and the ones that Gallus had, and I think that says something about the breadth of the biotech business,” he says.

“So we weren’t sacrificing something by making this combination. We were purely adding to Gallus. Really understanding those elements of the business is the fundamental starting point.

“And, of course, what’s critical is to understand the teams in place — their skills, their strengths, their culture and the technologies they use and the capacities that are in place,” Bamforth says. “Look at the operational side of the business and how complementary that is to what’s already in place.”

Another key thing is to reach out to clients, existing and prospective, to make sure they understand the acquisition, and that there’s going to be a continued focus and priority on supporting their work.

“So, in turn, the current clients won’t or don’t have concerns or worries, and if they do, address them,” Bamforth says. ●

Takeaways

  • With a merger or acquisition, look for a good fit.
  • Investigate the target’s performance; look into all aspects.
  • Keep your foot on the pedal for future M&As.

The Bamforth File 

Name: Mark Bamforth
Title: President and CEO
Company: Gallus BioPharmaceuticals LLC

Born: Glasgow, Scotland. I lived in Scotland until I was 23.

Education: The University of Strathclyde, in Glasgow. I received a chemical engineering degree and a master’s in business administration from Henley Business School near London.

What was your first job and what did you learn from it? The first job that I had was as a food porter, which was in a large department store cafeteria where the job was to keep all the food shelves stocked with hot foods. I used to go home smelling of fries because that was one of the duties — to make the fries. I learned from that that I should definitely get a degree and try to do something different from food handling for the rest of my life. It’s great to have that opportunity to see different types of jobs, and it definitely has an influence on your understanding of the rules where different people end up playing in their careers.
One of the most influential jobs that I had was in my final summer as a student. I worked for a whiskey company. I was able to borrow a computer from the university. I was able to set up all these intricate calculations for design of equipment. I worked with a very experienced engineer who had about 25 years’ experience, and he had never used a computer, but he was a fantastic engineer. I discovered that at the age of 20 that I knew something that he didn’t know.

What is the best business advice you ever received? Besides what I mentioned earlier, the other piece of advice was, as I was setting up Gallus, that whatever you do, you should try to build off a base of experience that you have. The greatest opportunities are likely to be where you have the greatest depths of experience. Trying to do a career switch to an area that you have no knowledge of or kind of a constant knowledge of is almost an impossible thing to do well. So your greatest opportunities are where your greatest knowledge is.

If you could speak with anyone from the present or past, with whom would you want to speak with? I think it would be to have a meeting with Tony Blair, who was the prime minister in the U.K. for 10 years. He really drove change in an organization that was pretty stuck in the past and had an image that was quite negative, and he really focused on cultural change transformation of that organization, the political party. Then when he was in power for many years, I think he drove economic change that was very positive.
I used to not understand the U.S. system of only giving two terms to a president, but I actually think it’s a very smart system because I think in the U.K. as you look at the two most influential leaders over the last 30 years, the tail end of their leadership has actually been quite stressful and deteriorated. So there’s something to be said for limiting terms for those in power.