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As filed with the Securities and Exchange Commission on June 8, 2015

Registration No. 333-         

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PATHEON HOLDINGS COÖPERATIEF U.A.*
(Exact Name of Registrant as Specified in Its Charter)

The Netherlands 2834 98-1153534
(State or Other Jurisdiction
of Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)

Herengracht 483
1017BT, Amsterdam
The Netherlands
+31 (0)20 622 3243
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Eric Sherbet
General Counsel and Secretary
111 Speen St, Suite 550
Framingham, Massachusetts 01701
(508) 620-2510
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Andrea Nicolas
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
Deanna Kirkpatrick
Davis, Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462© under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o
Non-accelerated filer ☒ (Do not check if a smaller reporting company) Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of Each Class
of Securities to be Registered
Proposed Maximum
Aggregate Offering Price(1)(2)
Amount of Registration Fee
Common Stock, par value €0.01 per share
$
100,000,000
 
$
11,620
 

(1)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act.
(2)Includes offering price of shares that the underwriters have the option to purchase.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

* Prior to the closing of this offering, Patheon Holdings Coöperatief U.A. will undergo a corporate reorganization, as a part of which it will convert from a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and change its corporate name to Patheon N.V.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated June 8, 2015
Preliminary Prospectus

          Shares


Common Stock

This is an initial public offering of shares of common stock of Patheon N.V. Patheon N.V. is offering           shares. The selling shareholders identified in this prospectus are offering           shares. Patheon N.V. will not receive any of the proceeds from the sale of the shares being sold by the selling shareholders.

Prior to this offering, there has been no public market for our common stock. The estimated initial public offering price is between $          and $          per share.

We intend to apply to list our common stock on the           under the symbol “PTHN.”

Per Share
Total
Initial public offering price
$
         
 
$
         
 
Underwriting discounts and commissions
$
 
 
$
 
 
Proceeds to us, before expenses
$
 
 
$
 
 
Proceeds to selling shareholders, before expenses
$
 
 
$
 
 

We and certain of the selling shareholders have granted the underwriters the right to purchase up to an additional           shares of common stock at the initial public offering price less the underwriting discounts and commissions.

Investing in our common stock involves a high degree of risk. See “Risk factors” beginning on page 14 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities regulators has approved or disapproved these securities or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on                   , 2015.

J.P. Morgan Morgan Stanley Jefferies UBS Investment Bank

                  , 2015

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We were incorporated in The Netherlands on December 24, 2013, in the form of a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid), by a partnership between JLL and DSM, (each as defined below) in connection with the acquisition of Patheon Inc., a Canadian company listed on the Toronto Stock Exchange, for approximately $1.4 billion in cash. In connection with the acquisition, which we refer to collectively with the related financing as the DPP Acquisition, DSM agreed to contribute its pharmaceutical business, or DPP, to us, JLL agreed to contribute, among other things, approximately $400 million in cash to us and certain employees of JLL and members of our management invested more than $90 million in us. Following the DPP Acquisition, which was consummated on March 11, 2014, Patheon Inc. and DPP became our wholly owned indirect subsidiaries.

Prior to the completion of this offering, Patheon Holdings Coöperatief U.A. will consummate a corporate conversion pursuant to which it will be converted from a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid) into a Dutch public limited company (naamloze vennootschap) and its corporate name will be changed to Patheon N.V. Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “Patheon,” the “Company,” “we,” “our,” “us” or similar terms refer to (i) prior to the DPP Acquisition Patheon Inc., and its subsidiaries, (ii) prior to the corporate conversion, Patheon Holdings Coöperatief U.A. and its subsidiaries and (iii) after the corporate conversion, Patheon N.V. and its subsidiaries. “DSM” refers to Koninklijke DSM N.V. and “JLL” refers to JLL Partners, Inc. and its affiliates.

All references in this prospectus to “$,” “US$,” “U.S. dollars,” “dollars” and “USD” mean U.S. dollars and all references to “€” and “euros,” means euros, unless otherwise noted.

We, the selling shareholders and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We, the selling shareholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither the delivery of this prospectus nor the sale of our common stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.

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Industry and market data

A portion of the market data and certain other statistical information used throughout this prospectus is based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable and that the information is accurate and complete, we have not independently verified the information. Certain data are also based on our good faith estimates and our management’s understanding of industry conditions. While we are not aware of any misstatements regarding our market, industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including but not limited to those discussed under “Risk factors” and elsewhere in this prospectus.

Statements in this prospectus describing us as being a provider of pharmaceutical manufacturing services or pharmaceutical development services relate to us as being a provider of such services to the global pharmaceutical industry. Statements in this prospectus referring to the development and production of active pharmaceutical ingredients, or APIs, and final drug products refer to APIs developed and produced based on chemical and biotechnological means (mammalian and microbial technologies). In this prospectus, we define the market for pharmaceutical development services to include: (i) early development; (ii) pre-formulation, formulation and development of dosage forms; (iii) the manufacturing of development-stage products during the regulatory drug approval process, including the manufacturing of pilot batches; (iv) scale-up and technology transfer services designed to validate commercial-scale drug manufacturing processes; and (v) the development of analytical methods and delivery of analytical services. We do not include clinical packaging revenue in our definition of the pharmaceutical development services market. In this prospectus, “specialty pharmaceutical companies” refer to pharmaceutical companies that typically (i) operate in a particular niche segment; (ii) focus on in-licensing or acquiring development stage drugs rather than engaging in new drug discovery; and/or (iii) develop new delivery methods for existing compounds.

References to the top 100 developmental stage drugs are based on potential revenues for such products, as reported by Evaluate Pharma.

Financial statements

Our fiscal year ends on October 31 of each year. References to any fiscal year refer to the year ended October 31 of the calendar year specified. Our financial information contained in this prospectus includes (i) our consolidated financial statements as of October 31, 2014 and 2013 and for the three years ended October 31, 2014, which have been audited by Ernst & Young LLP, independent registered public accounting firm, as stated in their report included elsewhere in this prospectus; (ii) the consolidated financial statements of Gallus BioPharmaceuticals, LLC as of December 31, 2013 and for the year then ended, which have been audited by Ernst & Young LLP, as set forth in their report thereon, included elsewhere in this prospectus; and (iii) the financial statements of DSM Pharmaceutical Products Group, or DPP, which have been audited by Ernst & Young Accountants LLP, independent auditors, as set forth in their report thereon, included elsewhere in this prospectus.

Trademarks

Patheon®, Banner®, Banner Life Sciences®, Banner Pharmacaps® and other trademarks, trade names or service marks of the Company appearing in this prospectus, including Patheon Advantage®, are our property. DSM Pharmaceutical Products and other trademarks, trade names or service marks of DSM and its subsidiaries appearing in this prospectus are the property of DSM. Any trademarks, trade names or service marks of other companies appearing herein are, to our knowledge, the property of their respective owners. Solely for convenience, certain trademarks, service marks and trade names referred to in this prospectus are listed without the ® and ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names.

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections “Risk factors,” “Management’s discussion and analysis of financial condition and results of operations” and the historical financial statements and related notes, in each case included in this prospectus. Some of the statements in this prospectus constitute forward-looking statements. See “Cautionary note regarding forward-looking statements.”

Our company

Patheon is a leading global provider of outsourced pharmaceutical development and manufacturing, or CDMO, services. We provide a comprehensive, integrated and highly customizable range of active pharmaceutical ingredient, or API, and finished drug product services to our customers, from formulation development to clinical and commercial-scale manufacturing, packaging, and lifecycle management. Our services address both small molecule and large molecule biological drugs. We are the only end-to-end integrated provider of such services, which, combined with our scientific and regulatory expertise and specialized capabilities, allows our customers to partner with a single outsourced provider to address their most complex development and manufacturing needs. We believe we have the broadest technological capabilities in our industry, across the full spectrum of development and manufacturing, to support our end-to-end integrated platform.

We believe we are a critical partner for our customers who increasingly rely on our customized formulation, development and manufacturing expertise to address growing drug complexity, cost pressures and regulatory scrutiny. We partner with many of our customers early in the drug development process, providing us the opportunity to continue to expand our relationship as molecules progress through the clinical phase and into commercial manufacturing. This results in long-term relationships with our customers and a recurring revenue stream. We believe our breadth of services, reliability and scale addresses our customers’ increasing need to outsource and desire to reduce the number of supply chain partners while maintaining a high quality of service.

Through our end-to-end integrated service offering, known as “Patheon OneSource”, we provide our customers with comprehensive solutions for both small molecule and large molecule biological pharmaceuticals across our three main segments, including development and manufacturing services for API (Drug Substance Services, or DSS), formulation development and pre-clinical and clinical drug product manufacturing (Pharmaceutical Development Services, or PDS), and commercial drug product manufacturing and packaging (Drug Product Services, or DPS).


Our end-to-end integrated service offering allows us to provide a comprehensive suite of capabilities across different drug formulations to address our customers’ needs. Our specialized capabilities address 75% of all pharmaceutical dosage forms, with expertise and specialized capacity in high potency, controlled substances, low-solubility, sterile, modified release and softgel

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technologies. We are the number one global provider of PDS with capabilities spanning the full breadth of advanced scientific services from discovery to regulatory approval, including formulation development across approximately 40 dosage forms, analytical services, and lifecycle management. In DPS, we believe we are among the largest providers of aseptic “fill-finish” services for finished dose biological drug products, and a leader in the highly complex development and manufacturing of biological drug substance through our four biological API facilities.

We provide development and manufacturing services for more than 800 products and molecules, and produce 24 billion solid doses and 150 million sterile doses annually, many of which address central nervous system, oncological and other life-threatening conditions. We believe we are the clear partner of choice for the pharmaceutical industry. Over the last decade, we have developed and manufactured 86 newly approved drugs, including 11 in 2014, which is more than twice the number of any other CDMO service provider. This represents 41% of the total outsourced approvals during this period. We serve a highly diverse, blue chip customer base comprised of more than 400 significant customers in over 60 countries, including all of the top 20 largest pharmaceutical companies, seven of the 10 largest biotechnology companies and seven of the world’s 10 largest specialty pharmaceutical companies.

We employ approximately 8,700 people, including 634 scientists, at more than 25 locations in the U.S., Canada, Europe, Australia, Japan and China. For the year ended October 31, 2014, our reported revenues were $1.7 billion.

The evolution of Patheon

In early 2011, James C. Mullen, who was previously the Chief Executive Officer of Biogen Idec Inc., one of the world’s largest biotech companies, joined Patheon as Chief Executive Officer, and assembled a leadership team that brought extensive pharmaceutical and healthcare sector experience, as well as a customer perspective to our business. Over the last four years, we have transformed our business into a global, end-to-end integrated service provider, and significantly enhanced our operating performance and growth potential. We made substantial investments in a broad range of technologies that provide our customers advanced development services, and operations systems that enable us to execute customer projects on-time and on-budget, while maintaining excellence in quality. As a result, we have positioned our business to meet the rapidly evolving development and manufacturing needs of our customers while continuing to deliver strong financial performance.

These strategic investments and operational changes implemented since 2011 have significantly improved our financial performance and provide the foundation for our future growth. These changes include:

Implementing operational excellence initiatives throughout the company. Since 2011, we have implemented a series of continuous improvement projects as part of our company-wide operational excellence program, or OE Program, to enhance our manufacturing and operational processes. The program relies on several key levers, including Lean and Six Sigma principles, visual management tools and performance boards to monitor key indicators, and employee engagement and empowerment. Examples of actions that we have taken as a part of our OE Program include enhancing our labor productivity, improving our manufacturing yield through streamlining floor operations, consolidating procurement activities, and rationalizing facilities. Our OE Program is deeply ingrained in our corporate culture and significantly reduces production costs, improves productivity of our operating assets and employees, and drives an industry-leading customer experience. We rely on our OE Program to drive key customer metrics, such as right-first-time, or RFT, and on-time-delivery, or OTD, which improve efficiency, reduce costs, enhance execution of client projects, and support growth by increasing manufacturing capacity and throughput. Our organization-wide focus on RFT and OTD, coupled with our technical capabilities and regulatory and scientific expertise, provides substantial value to our

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customers, allowing them to bring better products to market faster while reducing their manufacturing costs. This, in turn, drives our customer retention, new business wins and higher profitability. We apply our OE Program to our entire existing manufacturing network, as well as to businesses that we acquire.

Establishing a global end-to-end integrated platform by investing $1.4 billion in five M&A transactions to expand the range of development and manufacturing services offered to our customers. Since 2012, we have acquired and integrated five companies: Banner Pharmacaps, DSM Pharmaceutical Products, Gallus BioPharmaceuticals, Agere Pharmaceuticals and IRIX Pharmaceuticals. Through our acquisitions, we have added attractive and differentiated capabilities and technologies for developing and manufacturing a broad array of complex small molecules and large molecule biologics, including capabilities in softgel, development and commercial scale biological and small molecule API, North American sterile capacity, and low-solubility dispersion technology. We have developed a system for integrating acquisitions based on our operational excellence capabilities that ensures seamless transition into Patheon and rapid realization of operating efficiencies, which translate into revenue and cost synergies. We believe our expertise in integrating acquisitions positions Patheon to lead the consolidation of the fragmented CDMO industry and add capabilities to further strengthen our value proposition to our customers.
Enhancing our sales and marketing strategy and management team to facilitate strategic, solutions-based relationships with customers across multiple molecules and spanning a drug’s entire life cycle. Our global sales force is deeply embedded with our current customers and brings to bear the full resources and expertise of the Patheon organization to expand existing customer relationships and generate sales with new customers. We engage our senior management in the sales and marketing process to build strategic relationships and to enhance our customers’ experience. As a result of these efforts and our expanded capabilities, the number and value of our new business proposals have grown, our win rates and retention rates have increased significantly, and we continuously generate new business.

These changes have transformed Patheon into a global business with a diversified revenue and customer base, and strong revenue and margin growth. From fiscal 2011 to fiscal 2014, our revenues have grown from $698 million to $1,705 million, and from fiscal 2011 to the quarter ended January 31, 2015, our gross margin expanded by 9%. In addition, we have diversified our customer base, with our top 10 customers accounting for 36% of revenues in the quarter ended January 31, 2015 versus 54% in fiscal 2011.   


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The chart below highlights key information about our business.


Our industry and customer trends

The global pharmaceutical industry is a large, growing market. We serve all key sectors of the industry across both small molecules and large molecule biologics, through solid dose forms, sterile products and other complex products such as controlled substances. Revenue for the pharmaceutical industry was $742 billion in 2014 and is expected to grow to $1 trillion in 2020, representing a compounded annual growth rate of 5.1%. This growth is driven by global, secular trends, including increasing demand for pharmaceuticals because of expanded insurance coverage in key markets, an aging population and increased life expectancy rates, a growing middle class in emerging markets and growth in specialty pharmaceuticals. We believe these factors will continue to drive unit growth and complexity, benefiting CDMOs such as Patheon.

The outsourcing of API and drug product development and manufacturing by the pharmaceutical and biotechnology industries is an important driver of growth in our business. In 2014, the pharmaceutical industry spent approximately $140 billion on formulation, development and manufacturing, according to Evaluate Pharma, and approximately $40 billion is expected to be outsourced to CDMOs such as Patheon in 2015, according to Root Analysis. Currently, only 25% to 30% of pharmaceutical industry spending on formulation, development and manufacturing is outsourced, and in the future it is expected that our customer base will expand the use of outsourcing to CDMOs because of changing industry dynamics, driving growth in our market. Industry sources indicate that the CDMO industry’s annual growth rate is expected to be higher than the growth rate in the overall pharmaceutical industry, with overall CDMO growth in the mid- to high single digits, and higher for finished dosage formulation services, specialized technologies such as solubility solutions, and pharmaceuticals requiring sterile production such as biological drugs, capabilities in which Patheon has extensive experience.

The key industry dynamics underlying CDMO industry growth include:

Growing pricing and competitive pressures are forcing pharmaceutical and biotechnology companies to reduce fixed costs, reduce time to market for their new drugs, simplify historically complex supply chains and streamline vendor management, while ensuring reliability and quality.
Complex formulation challenges presented by many new products require expertise that is costly or impractical for pharmaceutical and biotechnology companies to build and operate in-house. For example, 60% to 90% of all new compounds entering development will need specialized manufacturing and/or molecular profile modification according to industry research in the American Pharmaceutical Review.
Growth in the number of drugs developed by emerging and mid-sized companies, which currently represents an estimated 80% of the drug pipeline. In 2014, approximately $40 billion of capital was raised to fund the development of drug pipelines of emerging biotechnology companies. For many of these companies, outsourcing to CDMOs such as Patheon is a critical component of their business model because they lack in-house formulation capabilities as well as the experience and infrastructure to manufacture the products themselves.

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Increasing regulatory complexity and focus on compliance. The industry is highly regulated with oversight by the U.S. Food and Drug Administration, or FDA, and its counterparts globally. We believe this represents an opportunity for qualified and global CDMOs to expand market share as companies are looking for a partner such as Patheon with a track record of quality excellence and deep regulatory capabilities, in order to avoid the consequences of manufacturing and quality issues and regulator-ordered shutdowns, such as drug shortages and lost revenue and earnings.

We serve the entire spectrum of customers, including large, mid-size and specialty pharmaceutical and biotechnology companies, emerging biotechnology companies, and generic pharmaceutical companies, as well as customers in other related areas, such as consumer or over-the-counter, nutritional and animal health companies, each with a distinct outsourcing dynamic:

Large pharmaceutical and biotechnology companies are actively shrinking their fixed asset base and focusing on their core activities of research and development, or R&D, and sales and marketing. These companies are increasingly recognizing that development and manufacturing are a non-core activity and deciding to outsource instead of investing substantial capital in building specialized capabilities in-house to address their increasingly complex pipeline.
Mid-size or specialty pharmaceutical and biotechnology companies are increasingly focused on sales, marketing, and late stage clinical development, as opposed to manufacturing and R&D, and as a result have limited internal capacity and capabilities and are outsourcing significant portions of their value chain.
Emerging pharmaceutical and biotechnology companies are being driven by venture and other investors to adopt virtual models that rely heavily on outsourcing through clinical proof-of-concept, and licensing to or acquisition by larger companies for late stage clinical development and commercialization. Due to the significant cost and time involved in switching service providers, companies such as Patheon with end-to-end integrated offerings are well-positioned to retain a molecule whether or not it is licensed or sold.
Generic pharmaceutical companies increasingly seek to outsource development and manufacturing of complex products they cannot produce with their existing infrastructure to third parties with such specialized capabilities given the importance of speed-to-market for these companies (for example, 180-day marketing exclusivity period for generic companies that are “first-to-file” under a patent challenge).

Relative to the outsourcing rate for the contract research organization, or CRO, industry, the CDMO industry is underpenetrated in most of its sub-segments, creating significant growth opportunities for a CDMO with an end-to-end integrated offering such as Patheon due to a growing propensity by biopharmaceutical companies to outsource. We believe our sector will follow a similar trajectory to the CRO industry.

Current outsourcing penetration


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In addition, the CDMO industry is highly fragmented, with more than 600 companies worldwide, many of which specialize in a single capability or are too small to achieve economies of scale and benefit from customer or product diversification. As a result of growing customer demand for scale providers with a broader range of services throughout the drug lifecycle, we believe there will be opportunities for a company such as Patheon to consolidate the industry through strategic acquisitions and to take market share from sub-scale competitors.

Our competitive strengths

We believe the following competitive strengths provide the foundation for our position as the leading provider of CDMO services:

Sector-leading performance driven by continuous operational excellence improvement. Over the last four years we have implemented a major initiative to drive operational efficiencies across our global network of facilities and rapidly and effectively integrate acquisitions. These improvements, which are deeply embedded in our operations and culture, are aimed at aligning our operations and incentives around the key customer metrics of RFT and OTD. As a result, our on-time performance for delivering customer projects increased from 86% in 2011 to 93% in 2014, to which our customers ascribe significant value. In addition, through efficiency gains we have increased capacity by 21% over this period without significant capital investments and generated substantial cost savings from improvements to both existing operations and acquired businesses. We believe these continuous efforts will continue to unlock capacity, reduce costs and help drive margin improvements annually.
End-to-end integrated capabilities. We provide a comprehensive, integrated and highly customizable range of API and finished drug product services to customers, from formulation development to clinical and commercial-scale manufacturing, packaging, and lifecycle management. Our services address both small molecule and large molecule biological drugs. We believe we are further differentiated by the wide range of formulation and manufacturing services we provide to our customers, which encompass 75% of the all pharmaceutical dosage forms, and by providing specialized capabilities our customers are increasingly seeking such as high potency, controlled substances, low-solubility, aseptic manufacturing, modified release and softgel formulations. Our breadth of technologies spanning development and manufacturing further support our end-to-end integrated platform, increasing product development speed and reducing costs for our customers by avoiding the time, regulatory burden and cost required to transfer a molecule to other service providers.
Extensive and long-term relationships with our customers from development through commercial manufacturing drives a recurring, highly-visible revenue stream. Our end-to-end integrated platform allows us to capture customer molecules early in the development process and retain them through full-scale commercial manufacturing, while efficiently and reliably maintaining quality in a complex supply chain. Over the last three years, 33% of our commercial manufacturing new product launches originated from our formulation and development projects. Since 2013, of the 27 PDS projects that received regulatory approval, 74% remained with Patheon for commercial manufacturing. Our drug product commercial manufacturing contracts generally extend five or more years and at least 90% of the products we currently manufacture are under contract through 2017.
Industry-leading reputation for quality and reliability across our global network. We are an industry leader in product quality and regulatory compliance. We have a culture of continuous improvement in quality, with internal standards and targets that exceed regulatory rules and customers’ internal standards. As a result, we believe we have one of the best track records in the industry for both pharmaceutical companies and outsourced providers. The increased regulatory scrutiny has resulted in industry supply disruptions or facility shutdowns, contributing to the recent record levels of drug shortages, including for numerous life-saving drugs. As regulatory requirements have become more stringent, many pharmaceutical companies have migrated to CDMO providers with a demonstrated ability to consistently meet quality and compliance standards. Patheon complements its industry-leading quality systems with a global network,

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which allows us to validate our customers’ products across multiple lines within a facility and across multiple facilities within our network to ensure supply security. In addition, our focus on RFT and OTD metrics underpin our industry-leading position for customer service.

Proven management team. Our management team is highly experienced, possesses deep industry knowledge and is operationally focused. The senior team, including our Chief Executive Officer, James C. Mullen, has incorporated the customer perspective from extensive careers in the pharmaceutical industry. Under Mr. Mullen’s leadership, we have repositioned our business by executing on our operational excellence initiatives and undertaking five acquisitions to establish Patheon as the only end-to-end integrated provider of CDMO services.

Our growth strategy

Our strategy is to grow top-line revenues organically, increase margins through operational efficiency initiatives and operating leverage from incremental revenue, and acquire and integrate companies that complement our existing platform. The key elements of our growth strategy are:

Leverage our end-to-end platform and global scale to extend our position as the leading integrated CDMO. The highly customizable services we provide throughout the product life cycle afford us significant opportunities to respond to growing customer demand for supply chain simplicity, development and manufacturing speed, and quality. Our PDS capabilities allow us to partner with our customers early in the development process of their molecules, providing a pipeline of molecules for our commercial manufacturing services as the molecules progress through the clinical phase and into commercial manufacture. In fiscal 2014, we had PDS projects for 618 drugs in clinical development, including 235 Phase 1 projects, 110 Phase 2 projects and 203 Phase 3 projects. During our evolution over the past four years, we have aligned our sales, marketing and management functions, on all organizational levels, to cross-sell the breadth of our capabilities and market the “Patheon OneSource” service offering. We believe this strategy will continue to drive business across all customer segments, and represents a high-dollar value, high-margin growth opportunity.
Continue operational excellence initiatives to optimize capacity and efficiency, reduce costs and drive outstanding financial performance. Our organization-wide operational excellence efforts focus on improving manufacturing efficiency and quality, driving cost savings, increasing capacity and creating value throughout the manufacturing chain. We intend to continue maximizing revenue growth and margin expansion through our resulting expanded capacity and facility utilization. For example, we have increased capacity by 21% since 2011, and our current utilization of 49% allows us to continue to launch new projects without significant investment in new facilities. We believe that this continuous focus on operational excellence will drive margin improvements and support robust revenue growth on an annual basis, which should result in significant operating leverage.
Target high-growth, high-value areas of the pharmaceutical and biotechnology industries. Our customers increasingly seek complex drug formulations and delivery technologies that exceed their own in-house capabilities. We intend to use our broad range of specialized dosage and formulation solutions, which include high potency, softgel, controlled substance, modified release and sterile dosage forms, to serve this market segment. For example, our acquisition of Gallus Biopharmaceuticals provided us with capabilities for complex clinical and commercial scale biologics manufacturing in the key U.S. market. We believe our expertise in these areas and the breadth of services we provide are differentiators for Patheon.
Selectively pursue strategic investments and acquisitions to support expanding customer needs and complement our existing platform. As a customer-driven company we have invested in new specialized technologies, expanded capacity in high-demand capabilities, and broadened our capabilities in high value-added product and service offerings in response to market demand. For example, in response to growing demand for pre-filled syringes to deliver biological molecules, we completed construction of a new production line in a European sterile facility in late 2013. In addition, we have acquired five companies since 2012, including three acquisitions between

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September 2014 and March 2015, each of which provided new or expanded capabilities and scale for our end-to-end integrated offering. We plan to continue adding complementary, high-value technological and operational capabilities and service offerings to meet customer needs through investment, acquisitions and collaborations. We expect Patheon will continue to be an active, disciplined consolidator of the fragmented CDMO industry to complement our organic growth strategy.

Formation of our Company

We were incorporated in The Netherlands on December 24, 2013, in the form of a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid), by a partnership between JLL and DSM in connection with the acquisition of Patheon Inc., a Canadian company listed on the Toronto Stock Exchange, for approximately $1.4 billion in cash. In connection with the acquisition, which we refer to collectively with the related financing as the DPP Acquisition, DSM agreed to contribute its pharmaceutical business, or DPP, to us, JLL agreed to contribute, among other things, approximately $400 million in cash to us and certain employees of JLL and members of our management invested more than $90 million in our Company. Following the DPP Acquisition, which was consummated on March 11, 2014, Patheon Inc. and DPP became our wholly owned indirect subsidiaries. From an accounting standpoint, Patheon Inc. was the acquirer and as such all financial information prior to March 11, 2014 is related to Patheon Inc.

In connection with this offering, we will convert from a Dutch cooperative with excluded liability for its members into a Dutch public limited company and will change our name from Patheon Holdings Coöperatief U.A. to Patheon N.V.

We currently operate in four reportable business segments:

Drug Product Services, or DPS, which provides manufacturing and packaging for approved prescription, OTC, and nutritional products and accounted for 60% of our total revenues in fiscal 2014.
Pharmaceutical Development Services, or PDS, which provides a wide spectrum of advanced formulation, production and technical services from the early stages of a product’s development to regulatory approval and beyond, as well as for new formulations of approved products for lifecycle extension and accounted for 10% of our total revenues in fiscal 2014.
Drug Substance Services, or DSS, which provides development and manufacturing for the biologically active component of a pharmaceutical product from early development through commercial production and accounted for 11% of our total revenues in fiscal 2014.
DPx Fine Chemicals, or DFC, which provides synthesis services to customers in the agricultural chemical industry and maleic anhydride and many specialty esters used in a broad range of industries and specialty products. Our DFC segment generated revenues of $167.8 million and accounted for 10% of our total revenues in fiscal 2014.

Our principal executive offices are located at Herengracht 483, 1017BT, Amsterdam, The Netherlands, and our phone number is +31 (0)20 622 3243. Our website is www.patheon.com. Information contained in or accessible through our website does not constitute a part of this prospectus.

Our principal shareholders

JLL Partners

JLL is a leading middle-market private equity firm with a 27-year track-record of adding value to complex investments through financial and operational expertise. Since its founding in 1988, JLL Partners has invested approximately $4.5 billion across seven funds and has completed 39 platform investments as well as more than 50 add-on acquisitions. The firm is comprised of 22 investment professionals. Since inception, JLL has remained an active healthcare investor, with deep experience in the outsourced pharmaceutical services industry. Examples of investments in this sector include PharmNet (CRO) and BioClinica (outsourced clinical trial management services).

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Koninklijke DSM N.V.

DSM is a global science-based company active in health, nutrition and performance materials organized in The Netherlands. Ordinary shares of DSM are listed with and traded on the              Euronext Amsterdam.

Risk factors

Investing in our common stock involves risks. You should carefully consider the risks described in “Risk factors” beginning on page 14 before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In such case, the trading price of our common stock would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face.

We are dependent on our customers’ spending on and demand for our manufacturing and development services.
The consumers of the products we manufacture for our customers may significantly influence our business, results of operations and financial condition.
Our services and offerings are highly complex, and if we are unable to provide quality and timely offerings to our customers, our business could suffer.
Our pharmaceutical development services projects are typically for a shorter term than our pharmaceutical manufacturing projects, and any failure by us to maintain a high volume of pharmaceutical development services projects, including due to lower than expected success rates of the products for which we provide services, could have a material adverse effect on our business.
Because a significant portion of our revenues comes from a limited number of customers, any decrease in sales to these customers could have a material adverse effect on our business, results of operations and financial condition. For the year ended October 31, 2014, our top 10 customers and products accounted for 39% and 24%, respectively, of our revenues. No customer accounted for more than 7% of our revenue for the year ended October 31, 2014.
We rely on our customers to supply many of the necessary ingredients for our products, and for other ingredients we rely on other third parties. Our inability to obtain the necessary materials or ingredients for the products we manufacture on behalf of our customers could have a material adverse effect on our business.
We are dependent on key management.
Our failure to comply with existing and future regulatory requirements, which include the operating and security standards of the U.S. Drug Enforcement Agency, or the DEA, the FDA and other comparable agencies, could adversely affect our results of operations and financial condition.
We are subject to environmental, health, safety and other laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future.
We and our customers depend on trademarks, patents, trade secrets, copyrights and other forms of intellectual property protections, but these protections may not be adequate.
Upon the listing of our shares the             , we will be a “controlled company” within the meaning of the rules of              and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.
We have identified a material weakness in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, this could have a material adverse effect on our business.

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The offering

Common stock offered by us
        shares.
Common stock offered by the selling shareholders
        shares.
Option to purchase additional shares from us and certain of the selling shareholders
        shares.
Common stock to be outstanding immediately after this offering
        shares (        shares if the underwriters exercise their option in full to purchase additional shares).
Use of proceeds
We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $        (or approximately $        if the underwriters exercise in full their option to purchase additional shares), based on an initial public offering price of $        per share (which is the mid-point of the range on the cover of this prospectus), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We will not receive any proceeds from the sale of shares of common stock by the selling shareholders.

We intend to use approximately $     million of the net proceeds we receive from this offering to repay all or a portion of our $550 million aggregate principal amount of 8.75%/9.50% Senior Notes due May 1, 2020 that were privately offered by our subsidiary in a transaction consummated in May 2015, or the Senior PIK Toggle Notes, and pay related fees and expenses.

See “Use of proceeds.”

Dividend Policy
Following completion of this offering, our board of directors does not currently intend to pay dividends on our common stock. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant. Under Dutch law, we are subject to certain restrictions that may limit our ability to pay dividends. See “Dividend Policy” for more information.
Risk factors
See “Risk factors” for a discussion of risks you should carefully consider before deciding to invest in our common stock.
Proposed        symbol
“PTHN.”

The number of shares of our common stock to be outstanding after this offering is based on         shares of our common stock outstanding as of             , 2015. This number excludes         shares of common stock reserved for issuance under our omnibus equity incentive plan as of             , 2015.

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Unless otherwise indicated, the information in this prospectus assumes the following:

the effectiveness of our amended and restated articles of association, the form of which will be filed as an exhibit to the registration statement of which this prospectus forms a part;
an initial public offering price of $        per share of common stock, which is the mid-point of the estimated initial public offering price range set forth on the cover page of this prospectus; and
no exercise by the underwriters of their option to purchase additional shares.

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Summary historical and pro forma financial data

The following tables present our summary consolidated historical and pro forma financial data as of the dates and for the periods presented. Our consolidated statement of operations data and balance sheet data as of and for the year ended October 31, 2014, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated historical financial data as of and for the three months ended January 31, 2015 are derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have prepared our interim consolidated financial statements on the same basis as our audited consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.

The unaudited pro forma financial data presented below have been derived by the application of pro forma adjustments to the consolidated historical financial statements included elsewhere in this prospectus. See “Unaudited pro forma consolidated financial information.” The unaudited summary pro forma financial data are presented for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor are such data indicative of future operating results.

You should read this information together with the information included under the headings “Risk factors,” “Capitalization,” “Unaudited pro forma consolidated financial information,” “Selected consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and the historical financial statements and related notes included elsewhere in this prospectus.

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Pro
Forma(1)
Historical
Pro
Forma(1)
Historical
Three Months ended
January 31,
Year ended October 31,
(in millions of dollars) 2015 2015 2014 2014
Statement of operations data:
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
472.6
 
$
488.8
 
$
1,976.8
 
$
1,704.8
 
Cost of goods sold
 
349.6
 
 
352.4
 
 
1,575.2
 
 
1,281.2
 
Gross profit
 
123.0
 
 
136.4
 
 
401.6
 
 
423.6
 
Selling, general and administrative expenses
 
71.9
 
 
77.2
 
 
272.3
 
 
261.5
 
Research and development
 
1.4
 
 
3.9
 
 
4.8
 
 
15.1
 
Repositioning expenses(3)
 
16.8
 
 
17.8
 
 
54.9
 
 
53.5
 
Acquisition and integration costs(4)
 
1.4
 
 
6.1
 
 
0.6
 
 
60.4
 
Impairment charge(5)
 
 
 
 
 
202.6
 
 
22.1
 
Gain on sale of capital assets
 
(0.1
)
 
(0.1
)
 
(0.1
)
 
(0.1
)
Operating income (loss)
 
31.6
 
 
31.5
 
 
(133.5
)
 
11.1
 
Interest expense, net
 
40.5
 
 
28.0
 
 
167.6
 
 
90.4
 
Foreign exchange loss, net
 
4.1
 
 
3.9
 
 
8.4
 
 
8.7
 
Refinancing expenses(6)
 
 
 
 
 
 
 
28.2
 
Other expenses, net
 
(0.1
)
 
(0.1
)
 
(1.9
)
 
(1.1
)
Loss before income taxes
 
(12.9
)
 
(0.3
)
 
(307.6
)
 
(115.1
)
Provision for income
taxes
 
6.0
 
 
5.8
 
 
7.3
 
 
4.1
 
Net loss
$
(18.9
)
$
(6.1
)
$
(314.9
)
$
(119.2
)
Historical
Pro Forma
As Adjusted(2)
(in millions of dollars) January 31, 2015 January 31, 2015
Balance sheet data:
 
 
 
 
 
 
Cash and cash equivalents
$
67.0
 
$
       
 
Total assets
 
2,246.3
 
 
 
 
Total debt
 
1,954.6
 
 
 
 
Total liabilities
 
2,674.6
 
 
 
 
Total members’ deficit
 
(428.3
)
 
 
 

(1) Represents statement of operations data on a pro forma basis to reflect the transactions described in “Unaudited pro forma consolidated financial information.”

(2) Represents balance sheet data on a pro forma as adjusted basis to give effect to (i) the transactions described in “Unaudited pro forma consolidated financial information”; (ii) the Second Additional Term Loan Facilities, which are comprised of a $20.0 million U.S. dollar-denominated term loan and a €155.0 million euro-denominated term loan, and were used to finance the IRIX Acquisition and for working capital and general corporate purposes; and (iii) the issuance and sale of common stock in this offering at an assumed initial public offering price of $    per share (the mid-point of the range on the cover of this prospectus) and the use of the proceeds therefrom received by us as described in “Use of proceeds,” after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(3) Repositioning expenses, which include employee severance and contract cancellation costs, were incurred in connection with the DPP Acquisition integration activities, the shutdown of the Venlo, The Netherlands and Caguas, Puerto Rico facilities, outsourcing of certain back-office functions and other operational initiatives.

(4) Acquisition and integration costs reflect those incurred in connection with the DPP Acquisition, Gallus Acquisition and the recently completed IRIX Acquisition and Agere Acquisition.

(5) The 2014 impairment charge is associated with the Capua facility as well as additional in-process research and development projects acquired in connection with our acquisition of Sobel USA Inc., a Delaware corporation, and Banner Pharmacaps Europe B.V., a private limited company organized under the laws of The Netherlands, or collectively Banner, for a net aggregate cash purchase price of approximately $269.0 million, which we refer to as the Banner Acquisition.

(6) Refinancing expenses were incurred in connection with the DPP Acquisition and Gallus Acquisition in 2014 and the related debt financings.

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Risk factors

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below and the other information contained in this prospectus, including the financial statements and the related notes, before you decide whether to purchase our common stock.

Risks related to our business

We are dependent on our customers’ spending on and demand for our manufacturing and development services. A reduction in spending or demand could have a material adverse effect on our business.

The amount of customer spending on pharmaceutical development and manufacturing, particularly the amount our customers choose to spend on outsourcing these services, has a large impact on our sales and profitability. The outcomes of our customers’ research and development activities also have an impact on the amount that our customers choose to spend on our services and offerings. Our customers determine the amounts that they will spend based upon, among other things, available resources, access to capital, and their need to develop new products, which, in turn, are dependent upon a number of factors, including their competitors’ research, development and product initiatives and the anticipated market uptake, and clinical and reimbursement scenarios for specific products and therapeutic areas. Consolidation in the pharmaceutical industry may impact such spending as customers integrate acquired operations, including research and development departments and manufacturing operations.

Any reduction in customer spending on pharmaceutical development and related services as a result of these and other factors could have a material adverse effect on our business, results of operations and financial condition.

Furthermore, demand for our Drug Product Services, or DPS, business is driven, in part, by products we develop for customers of our Pharmaceutical Development Services, or PDS, business. Due to the long lead times associated with obtaining regulatory approvals for many of these products, particularly dosage forms, and the competitive advantage that may result from gaining early approval, it is important that we maintain a sufficiently large portfolio of pharmaceutical products and that such products are brought to market on a timely basis. If our customers reduce their research and development activities, any resulting decrease in activity in our PDS business could also negatively affect activity levels in our DPS business. Any such decline in demand for our services could have a material adverse effect on our business, results of operations and financial condition.

The consumers of the products we manufacture for our customers may significantly influence our business, results of operations and financial condition.

We are dependent on, and have no control over, consumer demand for the products we manufacture for our customers. Consumer demand for our customers’ products could be adversely affected by, among other things, delays in health regulatory approval, the loss of patent and other intellectual property rights protection, the emergence of competing products, including generic drugs, the degree to which private and government drug plans subsidize payment for a particular product and changes in the marketing strategies for such products.

The healthcare industry has changed significantly over time, and we expect the industry to continue to evolve. Some of these changes, such as ongoing healthcare reform, adverse changes in government or private funding of healthcare products and services, legislation or regulations governing the privacy of patient information or patient access to care, or the delivery, pricing or reimbursement of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to reduce the number of our services and products that they purchase from us or the price they are willing to pay for our services and products. For example, the recent passage of healthcare reform legislation in the United States changes laws and regulations governing healthcare service providers and specifically includes certain cost containment measures that may have a material adverse effect on some or all of our customers and thus may have a

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material adverse effect on our business. Changes in the healthcare industry’s pricing, selling, inventory, distribution or supply policies or practices could also significantly reduce our revenue and profitability. In particular, volatility in individual product demand may result from changes in public or private payer reimbursement or coverage.

If the products we manufacture for our customers do not gain market acceptance, our revenues and profitability may be adversely affected. The degree of market acceptance of our customers’ products will depend on a number of factors, including:

the ability of our customers to publicly establish and demonstrate the efficacy and safety of such products, including favorably comparing such products to competing products;
regulatory approval of, or regulatory actions taken with respect to, such products;
the costs to potential consumers of using such products and the cost of competing products;
marketing and distribution support for such products; and
public perception of our customers and our customers’ industry.

If production volumes of key products that we manufacture for our customers and related revenues are not maintained, we may suffer a material adverse effect on our business, results of operations and financial condition. Additionally, any changes in product mix due to market acceptance of our customers’ products may have a material adverse effect on our margins.

Our services and offerings are highly complex, and if we are unable to provide quality and timely offerings to our customers, our business could suffer.

The services we offer are highly exacting and complex, due in part to strict regulatory requirements. See “—Risks related to regulatory and legal matters—Failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition.” Our operating results depend on our ability to execute and, when necessary, improve our quality management strategy and systems, and our ability to effectively train and maintain our employee base with respect to quality management. A failure of our quality control systems in our new and existing business units and facilities could result in problems with facility operations or preparation or provision of products. In each case, such problems could arise for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials or environmental factors and damage to, or loss of, manufacturing operations. Such problems could affect production of a particular batch or series of batches of products, requiring the destruction of such products or a halt of facility production altogether.

In addition, our failure to meet required quality standards may result in our failure to timely deliver products to our customers, which in turn could damage our reputation for quality and service. Any such failure could, among other things, lead to increased costs, lost revenue, reimbursement to customers for lost drug product, registered intermediates, registered starting materials, and APIs, damage to and possibly termination of existing customer relationships, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. Production problems in our drug and biologic manufacturing operations could be particularly significant because the cost of raw materials for such manufacturing is often higher than in our other businesses. If problems in preparation or manufacture of a product or failures to meet required quality standards for that product are not discovered before such product is released to the market, we may be subject to adverse regulatory actions, including product recalls, product seizures, injunctions to halt manufacture and distribution, restrictions on our operations, civil sanctions, including monetary sanctions, and criminal actions. In addition, such problems or failures could subject us to litigation claims, including claims from our customers for reimbursement for the cost of lost or damaged APIs, the cost of which could be significant.

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Our pharmaceutical development services projects are typically for a shorter term than our pharmaceutical manufacturing projects, and any failure by us to maintain a high volume of pharmaceutical development services projects, including due to lower than expected success rates of the products for which we provide services, could have a material adverse effect on our business, results of operations and financial condition.

Unlike our pharmaceutical manufacturing services business, where our contracts typically have durations of multiple years, our pharmaceutical development services business contracts are generally shorter in term and typically require us to provide development services within a designated scope. Since our pharmaceutical development services business focuses on products that are still in developmental stages, their viability depends on the ability of such products to reach their respective subsequent development phases. In many cases, such products do not reach subsequent development phases and, as a result, the profitability of the related pharmaceutical development service project may be limited. Even if a customer wishes to proceed with a project, the product we are developing on such customer’s behalf may fail to receive necessary regulatory approval or may have its development hindered by other factors, such as the development of a competing product.

If we are unable to continue to obtain new projects from existing and new customers, our pharmaceutical development services business could be adversely affected. Furthermore, although our outsourced pharmaceutical development services business acts as a pipeline for our outsourced pharmaceutical manufacturing services business, we cannot predict the conversion rate of our outsourced pharmaceutical development services projects to commercial manufacturing services projects, or how successful we will be in winning new projects that lead to a viable product. As such, an increase in the turnover rate of our outsourced pharmaceutical development services projects may negatively affect our outsourced pharmaceutical manufacturing services business at a later time. In addition, the discontinuation of a project as a result of our failure to satisfy a customer’s requirements may also affect our ability to obtain future projects from such customer, as well as from new customers. Any failure by us to maintain a high volume of outsourced pharmaceutical development services projects could also have a material adverse effect on our outsourced pharmaceutical development services businesses and, as a result, could have a material adverse effect on our business, results of operations and financial condition.

Our operations outside the United States are subject to a number of economic, political and regulatory risks.

Patheon is an international company organized in The Netherlands with facilities and offices in 12 countries as of January 31, 2015. For the fiscal year ended October 31, 2014, approximately 45% of our revenues was attributable to customers located outside the United States. Our operations or our customers outside the United States could be substantially affected by foreign economic, political and regulatory risks. These risks include but are not limited to:

fluctuations in currency exchange rates;
the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;
customers in certain foreign countries potentially having longer payment cycles;
changes in local tax laws, tax rates in certain countries that may exceed those of the United States and lower earnings due to withholding requirements or the imposition of tariffs, exchange controls or other restrictions;
seasonal reductions in business activity;
the credit risk of local customers and distributors;
unexpected changes in legal, regulatory or tax requirements;
local laws related to, and relationships with, local labor unions and works councils;

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the risk that certain governments may adopt regulations or take other actions that would have a direct or indirect adverse impact on our business and market opportunities, including nationalization of private enterprise;
non-compliance with applicable currency exchange control regulations, transfer pricing regulations or other similar regulations;
violations of the Foreign Corrupt Practices Act by acts of agents and other intermediaries over whom we have limited or no control;
violations of regulations enforced by the U.S. Department of The Treasury’s Office of Foreign Asset Control, or OFAC; and
general economic and political conditions.

Our operations are also subject to the effects of global competition, including potential competition from API or fine chemicals manufacturers in low-cost jurisdictions such as India and China.

While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful. If any of these economic or political risks materialize and we have failed to anticipate and effectively manage them, we may suffer a material adverse effect on our business and results of operations. If we do not remain in compliance with current regulatory requirements or fail to comply with future regulatory requirements, then such non-compliance may subject us to liability or other restrictions upon our operations and could have a material adverse effect on our business and results of operations.

From time to time, we may seek to restructure our operations and may divest non-strategic businesses or assets, which may require us to incur restructuring charges, and we may not be able to achieve the cost savings that we expect from any such restructuring efforts or divestitures.

To improve our profitability, we restructured our Puerto Rican operations as part of our efforts to eliminate operating losses and develop a long-term plan for our business in early 2014 and announced the closure of our facility in Venlo, The Netherlands on July 2, 2014. As part of our restructuring efforts, we incurred $53.5 million in repositioning expenses in fiscal 2014 which related to the DPP integration activities, the shutdown of the Venlo, The Netherlands and Caguas, Puerto Rico facilities, reduction of workforce at our Swindon, U.K. facility, outsourcing of certain back-office functions and other operational initiatives. In fiscal 2013 we incurred $15.8 million in repositioning expenses, of which $5.2 million related to the closure of the Olds, Alberta, Canada facility that was acquired as part of the Banner Acquisition and the shutdown of the Caguas, Puerto Rico facility, with the remainder related to the plan of termination associated with the Swindon, U.K. facility. We may adopt additional restructuring plans in order to improve our operational efficiency. Going forward, we expect to evaluate our restructuring plans from time to time pursuant to our operational excellence program.

We may not be able to achieve the level of benefit that we expect to realize from these or any future restructuring activities, within expected timeframes, or at all. Furthermore, upon the closure of any facilities in connection with our restructuring efforts, we may not be able to divest such facilities at fair prices or in a timely manner. In addition, as part of any plant closure and the transfer of production to another facility, we are required to obtain the consents of our customers and the relevant regulatory agencies, which we may not be able to obtain. Changes in the amount, timing and character of charges related to our current and future restructurings and the failure to complete, or a substantial delay in completing, any current or future restructuring plan could have a material adverse effect on our business.

We may also seek to sell some of our assets in connection with the divestiture of a non-strategic business or as part of internal restructuring efforts. Divesting non-strategic businesses may result in lower revenue and lower cash flows from operations. In addition, subject to the limits imposed by our existing and future debt instruments, we have broad discretion in how we choose to apply the proceeds we receive from asset sales in connection with the divestiture of non-strategic businesses.

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We sold the Caguas, Puerto Rico facility in February 2013, and the Olds, Alberta, Canada facility was closed and subsequently sold on November 1, 2013 and, in fiscal 2013, we recorded $11.8 million in impairment charges relating to the closure. To the extent that we are not successful in completing our planned divestitures or restructuring efforts, we may have to expend substantial amounts of cash, incur debt and continue to absorb loss-making or under-performing divisions. Any divestitures that we are unable to complete may involve a number of risks, including diversion of management’s attention, a negative impact on our customer relationships, costs associated with retaining the targeted divestiture, closing and disposing of the impacted business or costs associated with transferring business to other facilities.

Fluctuations in exchange rates could have a material adverse effect on our results of operations and financial performance.

As a company with numerous international entities, we have certain revenues, assets and liabilities that are denominated in currencies other than the U.S. dollar. Our most significant transaction exposures arise in our Canadian operations. In addition, approximately 90% of the revenues of our Canadian operations and approximately 10% of our operating expenses are transacted in U.S. dollars. As a result, we may experience transaction exposures because of volatility in the exchange rate between the Canadian and U.S. dollar. Based on our current U.S. dollar denominated net inflows, as of October 31, 2014 and January 31, 2015, respectively, an increase or decrease of 10% in the currency exchange rate between the Canadian and U.S. dollar would have an annual increase or decrease on earnings (loss) from continuing operations before taxes of approximately $19.1 million and $3.6 million (without accounting for hedging activities), respectively. In addition, the exchange-rate risk of our European operations could be affected by changes in the amounts of U.S. dollar-denominated revenue and raw material procurement costs.

The objective of our foreign exchange risk management activities is to minimize transaction exposures and any resulting volatility of our earnings. To mitigate exchange-rate risk, we utilize foreign exchange forward contracts and collars in certain circumstances to lock in exchange rates, with the objective of offsetting the loss or gain that results from the transaction or transactions being hedged with the gain or loss on the forward contracts and collars. As of October 31, 2014, we had entered into foreign exchange forward contracts and collars to cover approximately 81% of our expected Canadian-U.S. dollar cash flow exposures for fiscal 2015.

We include translation gains and losses related to certain foreign currency denominated intercompany loans as part of the net investment in certain foreign subsidiaries and in accumulated other comprehensive income in shareholders’ equity. We do not currently hedge translation exposures but may do so in the future.

In addition, we conduct a significant portion of our business using the euro. Appreciation of the U.S. dollar against the euro adversely affects our consolidated revenue as revenue, billed in euros is translated into U.S. dollars at a lower rate, though we also tend to incur costs in the same currency in which the related operations realize revenue, largely mitigating the effect on operating income and operating cash. However, if the U.S. dollar appreciates significantly, future revenue, operating income and operating cash flows could be affected to a greater extent. In addition, the appreciation of the U.S. dollar relative to foreign currencies reduces the U.S. dollar value of cash balances held in those currencies.

While we attempt to mitigate our foreign exchange risk by engaging in foreign currency hedging activities using derivative financial instruments, we may not be successful. We may not be able to engage in hedging transactions in the future, and if we do, we may not be able to eliminate foreign currency risk, and foreign currency fluctuations could have a material adverse effect on our results of operations and financial performance.

We are, or may be, party to certain derivative financial instruments, and our results of operations may be negatively affected in the event of non-performance by the counterparties to such instruments.

From time to time, we enter into interest rate swaps and foreign exchange forward contracts and collars to limit our exposure to changes in variable interest rates and foreign exchange rates. Such

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instruments may result in economic losses if exchange rates decline to a point lower than our fixed rate commitments. When we enter into such swaps and contracts, we are exposed to credit-related losses, which could impact our results of operations and financial condition in the event of non-performance by the counterparties to such instruments. For more information about our foreign currency risks, please see “Management’s discussion and analysis of financial condition and results of operations—Quantitative and qualitative disclosures about market risk.”

Because a significant portion of our revenues comes from a limited number of customers, any decrease in sales to these customers could have a material adverse effect on our business, results of operations and financial condition.

For the year ended October 31, 2014, our top 10 customers and products accounted for 39% and 24%, respectively, of our revenues. While no customer accounted for more than 7% of our revenue for the year ended October 31, 2014, we have customer concentration that increases credit risk and other risks associated with particular customers and particular products, including risks related to market demand for customer products and regulatory and other operating risks. Disruptions in the production of major products could damage our customer relationships and adversely impact our results of operations in the future. Revenues from customers that have accounted for significant sales in the past, either individually or as a group, may not reach or exceed historical levels in any future period. The loss or a significant reduction of business from any of our major customers could have a material adverse effect on our business, results of operations and financial condition.

Contract delays, cancellations and non-renewals may adversely affect our business.

Although we have many long-term contracts, the volume under each contract is subject to change, sometimes significantly based on the expected forecast volume required by our customers. In addition, certain of our contracts may be cancelled or delayed by customers for any reason upon short notice. Many of our outsourced pharmaceutical development services contracts are terminable by the customer upon 30 to 90 days’ notice. Multiple cancellations, non-renewals, or renewals on less favorable terms of significant contracts could have a material adverse effect on our business, results of operations and financial condition.

We operate in a market that is highly competitive. We compete to provide outsourced pharmaceutical development and manufacturing services to pharmaceutical and biotechnology companies around the world.

Our competition in the pharmaceutical manufacturing services market includes full-service pharmaceutical outsourcing companies; contract manufacturers focusing on a limited number of dosage forms; contract manufacturers providing multiple dosage forms; and large pharmaceutical companies offering third-party manufacturing services to fill their excess capacity. In addition, in Europe, there is a large number of privately owned, dedicated outsourcing companies that serve only their local or national markets. Also, large pharmaceutical companies have been seeking to divest portions of their manufacturing capacity, and any such divested businesses may compete with us in the future. Other pharmaceutical companies may elect to provide their own development and manufacturing services internally rather than outsourcing those functions to us or any of our competitors. We compete primarily on the basis of the security of supply (quality, regulatory compliance and financial stability), service (on-time delivery, manufacturing flexibility and solid track record) and cost-effective manufacturing (prices and a commitment to continuous improvement).

Our competition in the outsourced development services market includes a large number of laboratories that offer only a limited range of developmental services, generally at a small scale; providers focused on specific technologies and/or dosage forms; and several fully integrated companies that can provide the full complement of services necessary to develop, scale-up and manufacture a wide range of dosage forms. We also compete in the outsourced development services market with major pharmaceutical and chemical companies, specialized contract research organizations, research and development firms, universities and other research institutions. We may also compete with the internal operations of pharmaceutical companies that choose to develop

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their products internally. We compete primarily on the basis of scientific expertise, knowledge and experience in dosage form development, availability of a broad range of equipment, technology availability (e.g., chemical and biotechnology means), on-time delivery of clinical materials, compliance with cGMPs, or current Good Manufacturing Practices, regulatory compliance, cost-effective services and financial stability.

Some of our competitors may have substantially greater financial, marketing, technical or other resources than we do. Greater financial, marketing, technical or other resources may allow our competitors to respond to changes in market demand more quickly with new, alternative or emerging technologies. Changes in the nature or extent of our customer requirements may render our service and product offerings obsolete or non-competitive, which could have a material adverse effect on our business, results of operations and financial condition.

One factor causing increased competition is that a number of companies in Asia, particularly India, which have been entering the outsourced pharmaceutical development and manufacturing services sector over the past few years, have begun obtaining approval from the FDA for certain of their facilities and have acquired additional facilities in Europe and North America. One or more of these companies may become a significant competitor to us. Competition may, among other things, result in a decrease in the fees paid for our services and reduced demand for outsourced pharmaceutical development and manufacturing services, which could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to successfully offer new services.

In order to successfully compete, we will need to offer and develop new services. Without the timely introduction of enhanced or new services, our services and capabilities may become obsolete over time, in which case, our revenues and operating results would suffer. The related development costs may require a substantial investment before we can determine their commercial viability, and we may not have the financial resources to fund such initiatives.

In addition, the success of enhanced or new services will depend on several factors, including but not limited to our ability to:

properly anticipate and satisfy customer needs, including increasing demand for lower cost services;
enhance, innovate, develop and manufacture new offerings in an economical and timely manner;
differentiate our offerings from competitors’ offerings;
achieve positive clinical outcomes for our customers’ new products;
meet quality requirements and other regulatory requirements of government agencies;
obtain valid and enforceable intellectual property rights; and
avoid infringing the proprietary rights of third parties.

Even if we were to succeed in creating enhanced or new services, those services may not result in commercially successful offerings or may not produce revenues in excess of the costs of development and capital investment and may be quickly rendered obsolete by changing customer preferences or by technologies or features offered by our competitors. In addition, innovations may not be accepted quickly in the marketplace due to, among other things, entrenched patterns of clinical practice, the need for regulatory clearance and uncertainty over market access or government or third-party reimbursement. Moreover, the integration of our recent and future acquisitions could compound the challenges of integrating complementary products, services and technologies and developing and offering new services.

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We rely on our customers to supply many of the necessary ingredients for our products, and for other ingredients, we rely on other third parties. Our inability to obtain the necessary materials or ingredients for the products we manufacture on behalf of our customers could have a material adverse effect on our business, results of operations and financial condition.

Our DPS operations require various API components, compounds, raw materials and energy supplied primarily by third parties, including our customers. Our customers specify the components, raw materials and packaging materials required for their products and, in some cases, specify the suppliers from which we must purchase these inputs. In most cases, the customers supply the APIs to us at no cost pursuant to our standard services agreements.

We generally source our components, compounds and raw materials locally, and most of the materials required by us for our outsourced pharmaceutical manufacturing services business are readily available from multiple sources.

In some cases, we manage the supply chain for our customers, including the sourcing of certain ingredients and packaging material from third-party suppliers. In certain instances, such ingredients or packaging material can only be supplied by a limited number of suppliers or in limited quantities. If our customers or third-party suppliers do not supply APIs or other raw materials on a timely basis, we may be unable to manufacture products for our customers. A sustained disruption in the supply chain involving multiple customers or vendors at one time could have a material adverse effect on our results of operations.

Furthermore, customers or third-party suppliers may fail to provide us with raw materials and other components that meet the qualifications and standards required by us or our customers. If third-party suppliers are not able to provide us with products that meet our or our customers’ specifications on a timely basis, we may be unable to manufacture products, or products may be available only at a higher cost or after a long delay, which could prevent us from delivering products to our customers within required timeframes. Any such inability to manufacture or delay in delivering our products may create liability for us to our customers for breach of contract or cause us to experience order cancellations and loss of customers. In the event that we produce products with inferior quality components and raw materials, we may become subject to product liability or warranty claims caused by defective raw materials or components from a third-party supplier or from a customer, or our customer may be required to recall its products from the market.

It is also possible that any of our supplier relationships could be interrupted due to natural disasters, international supply disruptions caused by geopolitical issues or other events or could be terminated in the future. Any sustained interruption in our receipt of adequate supplies could have an adverse effect on our business and financial results. In addition, while we have supply chain processes intended to reduce volatility in component and material pricing, we may not be able to successfully manage price fluctuations. Price fluctuations or shortages could have a material adverse effect on our results of operations and financial condition.

Technological change may cause our offerings to become obsolete over time. A decrease in our customers’ purchases of our offerings could have a material adverse effect on our business, results of operations and financial condition.

The healthcare industry is characterized by rapid technological change. Demand for our services may change in ways that we may not anticipate because of evolving industry standards or as a result of evolving customer needs that are increasingly sophisticated and varied or because of the introduction by competitors of new services and technologies. In addition, we require capital and resources to support the maintenance and improvement of our facilities, including replacing or repairing aging production equipment and updating overall facility master plans. If we are unable to maintain and improve our facilities, we may experience unscheduled equipment downtime and unpredicted machinery failure and become unable to supply our customers with products or services which may affect business continuity. Any such incident or disruption in business continuity could have a material adverse effect on our business, results of operations and financial condition.

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We are dependent on key management.

We are dependent upon the continued support and involvement of our key management, including James C. Mullen, our Chief Executive Officer. The majority of our key management have employment agreements with us that impose noncompetition and nonsolicitation restrictions following cessation of employment. Because our ability to manage our business activities and, hence, our success, depends in large part on the collective efforts of such personnel, our inability to continue to attract, retain or motivate such personnel could have a material adverse effect on our business. Moreover, retaining and motivating key personnel from our recent acquisitions who will be instrumental in integrating our businesses will be important to our ability to successfully achieve our business objectives.

Certain of our pension plans are underfunded, and additional cash contributions may be required, which may reduce the cash available for our business.

Certain of our employees in Canada, France and the United Kingdom are participants in defined benefit pension plans that we sponsor. In addition, employees at our facility in The Netherlands are covered by a defined benefit pension plan and certain employees of DPP in Germany, the United States and Austria are covered by defined benefit pension plans. As of October 31, 2014, the unfunded pension liability on our pension plans was approximately $77.3 million in the aggregate. The amount of future contributions to our defined benefit plans will depend upon asset returns and a number of other factors and, as a result, the amounts we will be required to contribute to such plans in the future may vary. Such cash contributions to the plans will reduce the cash available for our business.

In relation to our U.K. pension plan, the trustees are authorized to accelerate the required payment of future contribution obligations if they have received actuarial advice that the plan is incapable of paying all the benefits that have or will become due for payment as they become due. If the trustees of our U.K. pension plan were to be so advised and took such a step, our U.K. subsidiary would be required to meet the full balance of the cost of securing the benefits provided by the plan through the purchase of annuities from an insurance company, to the extent that it was able to do so. The cost would be likely to exceed the amount of any deficit under the plan while the plan was ongoing.

Any failure of our information systems, such as from data corruption, cyber-based attacks or network security breaches, could have a material adverse effect on our business and results of operations.

We rely on information systems in our business to obtain, rapidly process, analyze and manage data to:

facilitate the manufacture and distribution of thousands of inventory items to and from our facilities;
receive, process and ship orders on a timely basis;
manage the accurate billing of, and collections from, our customers;
manage the accurate accounting for, and payment to, our vendors; and
schedule and operate our global network of manufacturing and development facilities.

Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information. We cannot be certain that advances in criminal capabilities, new discoveries in the field of cryptography or other developments will not compromise or breach the technology protecting the networks that access our products and services. If these systems are interrupted, damaged by unforeseen events or fail for any extended period of time, including due to the actions of third parties, then we may not be able to effectively manage our business, and this could have a material adverse effect on our results of operations.

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Our use of chemicals and chemical processes is subject to inherent risk.

We use chemical ingredients in the manufacture of certain of our products. Due to the nature of the manufacturing process itself, there is a risk of incurring liability for damages caused by or during the storage or manufacture of both the chemical ingredients and the finished products. For example, the DPx Fine Chemicals business relies on reaction chemistries for producing its products. Reaction chemistries utilize or create heat and pressure to either initiate or enhance the reaction and involve the use of solvents. Reaction chemistries are associated with different risks than those associated with the manufacture of finished dosage products. Risks associated with reaction chemistries include those associated with high temperatures (steam utilization), high pressures (pressure rated vessels), hazardous chemicals such as solvents, and risks associated with handling such materials such as spills both within secondary containment and outside of secondary containment. The processes used in DPx Fine Chemicals’ facilities typically involve large volumes of solvents and chemicals, creating the potential for larger spills and impacts. If any of these risks materialize, it could result in significant remediation and other costs, potential adverse regulatory actions and liabilities, any of which could have a material adverse effect on our business, results of operations and financial condition.

We may in the future engage in acquisitions and joint ventures. We may not be able to complete such transactions, and such transactions, if executed, pose significant risks.

Our future success may depend on our ability to acquire other businesses or technologies or enter into joint ventures that could complement, enhance or expand our current business or offerings and services or that might otherwise offer us growth opportunities. We may face competition from other companies in pursuing acquisitions and joint ventures. Our ability to enter into such transactions may also be limited by applicable antitrust laws and other regulations in the United States, The Netherlands and other jurisdictions in which we do business. To the extent that we are successful in making acquisitions, we may have to expend substantial amounts of cash, incur debt and assume loss-making divisions. We may not be able to complete such transactions due to a failure to secure financing. Any future acquisitions we undertake may be financed through cash provided by operating activities, borrowings under our credit facilities and/or other debt or equity financing. All of these could reduce our cash available for other purposes. For example, we incurred additional indebtedness to fund the Banner Acquisition, and this additional debt consumed a significant portion of our pre-DPP Acquisition ability to borrow. In addition, we also incurred additional indebtedness to fund the DPP Acquisition, the Gallus Acquisition, the IRIX Acquisition and the Agere Acquisition.

Any transactions that we are able to identify and complete may involve a number of risks, including but not limited to:

the diversion of management’s attention to negotiate the transaction and then integrate the acquired businesses or joint ventures;
the possible adverse effects on our operating results during the negotiation and integration process;
significant costs, charges or write-downs;
the potential loss of customers or employees of the acquired business;
delays or reduction in realizing expected synergies;
unexpected liabilities relating to a joint venture or acquired business; and
our potential inability to achieve our intended objectives for the transaction.

In addition, we may be unable to maintain uniform standards, controls, procedures and policies with respect to an acquired business, and this may lead to operational inefficiencies. To the extent that we are successful in making acquisitions, we may have to expend substantial amounts of cash, incur debt and assume loss-making divisions.

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Certain of our executive officers will continue to provide management services for BLS.

In connection with the expected spin-off of BLS, we expect to enter into agreements with BLS to continue to provide commercial manufacturing services and management services, including strategic management, finance, information technology and legal support services, after the spin-off. We expect that certain of our executive officers will provide the management services. If BLS requires more time from these executive officers than is currently anticipated or BLS grows faster than anticipated, these executive officers may not be able to devote sufficient time to our business, which may limit our ability to achieve our business objectives.

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or in our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our indebtedness.

Following this offering, we will continue to have a significant amount of debt. As of January 31, 2015, on an as-adjusted basis giving effect to this offering and the use of proceeds therefrom as described under “Use of proceeds,” we would have had approximately $     billion of indebtedness. In addition, we would have had approximately $    million of availability under our $200.0 million revolving credit facility, which we refer to as the Revolving Credit Facility. If the proceeds of this offering are not sufficient to repay our Senior PIK Toggle Notes and pay related fees and expenses, our indebtedness may be higher.

Our high degree of indebtedness could have important consequences for us, including:

increasing our vulnerability to adverse economic, industry or competitive developments;
exposing us to the risk of increased interest rates because certain of our borrowings are at variable rates of interest;
exposing us to the risk of fluctuations in exchange rates because certain of our borrowings are denominated in euros;
making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the governing our indebtedness;
restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and
limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a disadvantage relative to our competitors with less debt and who, therefore, may be able to take advantage of opportunities that our indebtedness prevents us from exploiting.

Any of the foregoing consequences could have a material impact on our business, financial condition and results of operations.

Despite our existing indebtedness level, we may still be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness.

Despite our existing level of indebtedness, we may be able to incur substantial additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. See “Management’s discussion and analysis of financial condition and results of operations—Financing arrangements.”

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Our debt agreements contain restrictions that limit our flexibility in operating our business.

On March 11, 2014, we completed the refinancing of our existing credit facility, or the Refinancing, pursuant to which we entered into a credit agreement, or the Credit Agreement, documenting a new credit facility, or the Credit Facility, which we amended in September 2014. Our Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things:

incur additional indebtedness;
pay certain dividends on, repurchase or make distributions in respect of capital stock or make other restricted payments;
issue or sell capital stock of restricted subsidiaries;
guarantee certain indebtedness;
make certain investments;
sell or exchange assets;
enter into certain transactions with affiliates;
create certain liens; and
consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.

A breach of any of these covenants could result in a default under the Credit Agreement, including as a result of cross default provisions, and, in the case of our Credit Facility, permit the lenders to cease making loans to us. See “Management’s discussion and analysis of financial condition and results of operations—Financing arrangements.”

Risks related to regulatory and legal matters

Our failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition.

The healthcare industry is highly regulated. We are subject to various local, state, federal, foreign and transnational laws and regulations, which include the operating and security standards of the DEA, FDA, various state boards of pharmacy, state health departments, the U.S. Department of Health and Human Services, or the DHHS, the European Medicines Agency, or EMA, in Europe, the EU member states and other comparable agencies and, in the future, any changes to such laws and regulations could adversely affect us. In particular, we are subject to laws and regulations concerning good manufacturing practices and drug safety. Our subsidiaries may be required to register for permits and/or licenses with, and may be required to comply with the laws and regulations of the DEA, the FDA, the DHHS, foreign agencies including the EMA, and other various state boards of pharmacy, state health departments and/or comparable state agencies as well as certain accrediting bodies depending upon the type of operations and location of product distribution, manufacturing and sale.

The manufacture, distribution and marketing of our offerings for use in our customers’ products are subject to extensive ongoing regulation by the FDA, the DEA, the EMA, and other equivalent local, state, federal and foreign regulatory authorities. In addition, like all commercial drug manufacturers, we are subject to inspections by these regulatory authorities. Upon completion of an inspection, the FDA issues any inspectional observations on a Form 483. We are required to respond to the observations in writing and the FDA will close out the inspection once it is satisfied with our response. Currently, FDA inspections that resulted in observations at our Greenville, North Carolina, Ferentino, Italy and Monza, Italy facilities are not yet closed out. Failure by us or by our customers to comply with the requirements of these regulatory authorities, including without limitation, remediating any inspectional observations to the satisfaction of these regulatory authorities, could result in warning letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution, restrictions on our operations, civil or criminal

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sanctions, or withdrawal of existing or denial of pending approvals, including those relating to products or facilities. In addition, such a failure could expose us to contractual or product liability claims as well as contractual claims from our customers, including claims for reimbursement for lost or damaged active pharmaceutical ingredients, the cost of which could be significant.

In addition, any new offerings or products must undergo lengthy and rigorous clinical testing and other extensive, costly and time-consuming procedures mandated by the FDA, the EMA and other equivalent local, state, federal and foreign regulatory authorities. We or our customers may elect to delay or cancel anticipated regulatory submissions for current or proposed new products for any number of reasons.

Although we believe that we are in compliance in all material respects with applicable laws and regulations, there can be no assurance that a regulatory agency or tribunal would not reach a different conclusion concerning the compliance of our operations with applicable laws and regulations. In addition, there can be no assurance that we will be able to maintain or renew existing permits, licenses or any other regulatory approvals or obtain, without significant delay, future permits, licenses or other approvals needed for the operation of our businesses. Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary permits and licenses could have an adverse effect on our results of operations and financial condition.

We are subject to environmental, health and safety laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future.

Our facilities and operations are subject to a variety of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous and other regulated substances and wastes, soil and groundwater contamination and employee health and safety. We are also subject to laws and regulations governing the destruction and disposal of raw materials and non-compliant products, the handling of regulated material that is included in our offerings and the disposal of our offerings at the end of their useful life. In some jurisdictions the chemical components of some of our products are also subject to regulation, and from time to time we may be required to change product formulations to comply with such requirements. In addition, increasing efforts to control emissions of greenhouse gases, or GHG, may impact our operations, and compliance with future requirements to reduce GHG emissions may cause us to incur additional capital and operational expenditures. Environmental, health and safety laws and regulations have increasingly become more stringent, and we may incur additional expenses to ensure compliance with existing or new requirements in the future. Any failure by us to comply with environmental, health and safety requirements could result in the limitation or suspension of our operations. We also could incur monetary fines, civil or criminal sanctions, third-party claims or cleanup or other costs or damages pursuant to such requirements. Although we maintain insurance coverage for certain environmental liabilities, the costs of environmental remediation and other liabilities may exceed the amount of such coverage or may not be covered by such insurance. In addition, compliance with environmental, health and safety requirements could restrict our ability to expand our facilities or require us to acquire costly pollution control equipment, incur other significant expenses or modify our manufacturing processes.

Our manufacturing facilities, in varying degrees, use, store and dispose of hazardous and other regulated substances in connection with their processes. In some cases, the volume of regulated substances used in these processes or the manner in which they are used result in a potential for large spills or other impacts. At some of our facilities, these substances are stored in underground storage tanks or used in refrigeration systems. Some of our facilities, including our current and former facilities in Puerto Rico, have been utilized over a period of years as manufacturing facilities, with operations that may have included on-site landfilling or other waste disposal activities, and have certain known or potential conditions that may require remediation in the future; and several of these have undergone remediation activities in the past by former owners or operators. In addition, a number of our facilities are currently undergoing assessment, remediation or monitoring, including at our sites in Greenville, NC and Capua, Italy. While we maintain accruals for

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ongoing remediation at certain of our sites, these accruals may not fully capture all future costs necessary to perform any required corrective action. Any costs above what we have previously accrued could have a significant impact on our results and ongoing operations. In addition, some of our facilities are located near third-party industrial sites and may be impacted by contamination migrating from such sites, or are located on multi-company campuses with shared utilities, infrastructure and permits, with the potential for other companies to impact our operations or the infrastructure used to support our operations, such as wastewater treatment facilities or consolidated environmental permits. A number of our facilities use groundwater from onsite wells for process and potable water, and if these onsite sources became contaminated or otherwise unavailable for future use, we could incur expenses for obtaining water from alternative sources. In addition, our operations have grown through acquisitions, and it is possible that facilities that we have acquired may expose us to environmental liabilities associated with historical site conditions that have not yet been discovered. We have also sold or closed some facilities, and may remain or become obligated to address past environmental contamination relating to such locations. Some environmental laws impose liability for contamination on current and former owners and operators of affected sites, regardless of fault. If remediation costs or potential claims for personal injury or property or natural resource damages resulting from contamination arise, they may be material and may not be recoverable under any contractual indemnity or otherwise from prior owners or operators or any insurance policy. Additionally, we may not be able to successfully enforce any such indemnity or insurance policy in the future. In the event that new or previously unknown contamination is discovered or new cleanup obligations are otherwise imposed in connection with any of our currently or previously owned or operated facilities, we may be required to take additional, unplanned remedial measures and incur costs for which no reserves have been recorded.

We are subject to product and other liability risks that could have a material adverse effect on our results of operations and financial condition.

We may be named as a defendant in product liability lawsuits, which may allege that products or services we, or any newly acquired businesses, have provided have resulted or could result in an unsafe condition or injury to consumers. We may also be exposed to other liability lawsuits, such as other tort, regulatory or intellectual property claims. Such lawsuits could be costly to defend and could result in reduced sales, significant liabilities and diversion of management’s time, attention and resources. Even claims without merit could subject us to adverse publicity and require us to incur significant legal fees. Furthermore, product liability claims and lawsuits, regardless of their ultimate outcome, could have a material adverse effect on our operations and financial condition and reputation and on our ability to attract and retain customers.

Historically, we have sought to manage this risk through the combination of product liability insurance and contractual indemnities and liability limitations in our agreements with customers and vendors. The availability of product liability insurance for companies in the pharmaceutical industry is generally more limited than insurance available to companies in other industries. Insurance carriers providing product liability insurance to those in the pharmaceutical and biotechnology industries generally limit the amount of available policy limits, require larger deductibles and exclude coverage for certain products and claims. We currently maintain insurance coverage for product and other liability claims. If our existing liability insurance is inadequate or we are not able to maintain such insurance, there may be claims asserted against us that are not covered by such insurance. A partially or completely uninsured claim, if successful and of sufficient magnitude, could have a material adverse effect on our results of operations and financial condition.

We and our customers depend on trademarks, patents, trade secrets, copyrights and other forms of intellectual property protections, but these protections may not be adequate.

We rely on a combination of trademark, patent, trade secret, copyright and other intellectual property laws and nondisclosure and other contractual provisions in the United States, Canada and other countries. We have applied in the United States and in certain foreign countries for registration of a limited number of trademarks and patents, some of which have been registered or

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issued. There can be no assurance that these protections will prove meaningful against competitive offerings or otherwise be commercially valuable or that we will be successful in obtaining additional intellectual property or enforcing our intellectual property rights against unauthorized users. Our applications may not be approved by the applicable governmental authorities, and third parties may seek to oppose or otherwise challenge our registrations or applications. We also rely on unregistered proprietary rights, including know-how and trade secrets related to our outsourced pharmaceutical development and manufacturing services. Although we require our employees and other third parties, such as clients, to enter into confidentiality agreements prohibiting them from disclosing our proprietary information or technology, these agreements may not provide meaningful protection for our trade secrets and proprietary know-how. In addition, intellectual property enforcement may be unavailable in some foreign countries. Further, third parties who are not party to our confidentiality agreements may obtain access to our trade secrets or know-how, and others may independently develop similar or equivalent trade secrets or know-how. The use of our technology or similar technology by others could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business. If our proprietary information is divulged to third parties, including our competitors, or our intellectual property rights are otherwise misappropriated or infringed, our competitive position could be harmed.

If we are unable to protect the confidentiality of our customers’ proprietary information, we may be subject to claims.

Many of the formulations used by us in manufacturing or developing products to customer specifications are subject to trade secret protection, patents or other protections owned or licensed by the relevant customer. We take significant efforts to protect our customer’s proprietary and confidential information, including requiring our employees to enter into agreements protecting such information. If, however, any of our employees breaches the non-disclosure provisions in such agreements, or if our customers make claims that their proprietary information has been disclosed, this could have a material adverse effect on our business.

Our services and our customers’ products may infringe on or misappropriate the intellectual property rights of third parties.

We cannot be certain that we do not infringe on the intellectual rights of third parties. Any claims that our services infringe third parties’ rights, including claims arising from our contracts with our customers, regardless of their merit or resolution, could be costly and may divert the efforts and attention of our management and technical personnel. We may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If such proceedings result in an adverse outcome, we could be required, among other things, to pay substantial damages (potentially treble damages in the United States), discontinue the use of the infringing technology, expend significant resources to develop non-infringing technology, license such technology from the third party claiming infringement (which license may not be available on commercially reasonable terms or at all) and/or cease the manufacture, use or sale of the infringing processes or offerings, any of which could have a material adverse effect on our business.

In addition, our customers’ products may be subject to claims of intellectual property infringement and such claims could materially affect our business if their products cease to be manufactured and they have to discontinue the use of the infringing technology which we may provide. Any of the foregoing could affect our ability to compete or could have a material adverse effect on our business, financial condition and results of operations.

Tax legislation initiatives or challenges to our tax positions could have a material adverse effect on our results of operations and financial condition.

We are a multinational business with global operations. As such, we are subject to the tax laws and regulations of The Netherlands, Canada, the United States and many international jurisdictions. From time to time, various legislative initiatives may be proposed that could have a material adverse effect on our effective tax rate or tax payments. In addition, tax laws and regulations are extremely

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complex and subject to varying interpretations. If our tax positions are challenged by relevant tax authorities, we may not be successful in defending such a challenge and this could have a material adverse effect on our results of operations and financial condition.

Further changes in the tax laws of the foreign jurisdictions in which we operate could arise as a result of the base erosion and profit sharing, or BEPS, project being undertaken by the Organisation for Economic Co-operation and Development, or OECD. The OECD, which represents a coalition of member countries that encompass most of the jurisdictions in which we operate, is contemplating changes to numerous long principles through its BEPS project, which is focused on a number of issues, including the shifting of profits between affiliated entities in different tax jurisdictions. It is possible that jurisdictions in which we do business could react to the BEPS initiative by enacting tax legislation that could adversely affect our shareholders through increasing tax liabilities.

Tax assessments by various tax authorities could be materially different than the amounts we have provided for in our consolidated financial statements. We are regularly audited by various tax authorities. From time to time, these audits could result in proposed assessments. While we believe that we have adequately provided for any such assessments, future settlements could be materially different than we have provided for and thereby have a material adverse effect on our earnings and cash flows. We operate in various tax jurisdictions, and although we believe that we have provided for income and other taxes in accordance with the relevant regulations, if the applicable regulations were ultimately interpreted differently by a taxing authority, we could be exposed to additional tax liabilities. While we believe our tax positions, including, among others, intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be challenged by jurisdictional tax authorities and could have a significant impact on our tax position.

We are subject to labor and employment laws and regulations, which could increase our costs and restrict our operations in the future.

We employ approximately 8,700 employees and contractors worldwide, including 5,100 employees in North America, 3,525 in Europe and 75 in the Asia-Pacific region. Certain of our employees are represented by labor organizations, and national works councils and/or labor organizations are active at our European facilities consistent with labor environments/laws in European countries. Similar relationships with labor organizations or national works councils exist at all of our facilities in the United Kingdom, France, Italy, The Netherlands, Austria and Germany. Our management believes that our employee relations are satisfactory. However, further organizing activities or collective bargaining may increase our employment-related costs and we may be subject to work stoppages and other labor disruptions. Moreover, as employers are subject to various employment-related claims, such as individual and class actions relating to alleged employment discrimination, wage-hour and labor standards issues, such actions, if brought against us and successful in whole or in part, may affect our ability to compete or have a material adverse effect on our business, financial condition and results of operations.

Risks related to this offering and our common stock

You will experience immediate and substantial dilution in the book value of your common stock.

The initial public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of our common stock. Pro forma net tangible book value represents the amount of our tangible assets on a pro forma basis, less our pro forma total liabilities. As a result, you will incur immediate dilution of $          per share (based on an initial public offering price of $    per share, the mid-point of the range on the cover of this prospectus). For more information, see “Dilution.”

There may not be an active trading market for shares of our common stock, which may cause our common stock to trade at a discount from its initial offering price and make it difficult to sell the shares you purchase.

Prior to this offering, there has been no public trading market for shares of our common stock. It is possible that, after this offering, an active trading market will not develop or continue, which would make it difficult for you to sell your shares of common stock at an attractive price or at all.

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The initial public offering price per share of our common stock will be determined by agreement among us and the representatives of the underwriters, and may not be indicative of the price at which the shares of our common stock will trade in the public market after this offering.

The historical and pro forma financial information in this prospectus may not permit you to predict our costs of operations.

The historical financial information in this prospectus does not reflect the added costs we expect to incur as a public company or the resulting changes that will occur in our capital structure and operations. In addition, the estimates we used in our pro forma financial information may not be similar to our actual experience as a public company. For more information on our historical and pro forma financial information, see “Unaudited pro forma consolidated financial information,” “Management’s discussion and analysis of financial condition and results of operations” and the historical financial statements and related notes included elsewhere in this prospectus.

If securities analysts do not publish research or reports about our business or if they downgrade our company or our sector, the price of our common stock could decline.

The trading market for our common stock will depend in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our company or our industry, or the stock of any of our competitors, the price of our common stock could decline. If one or more of these analysts ceases coverage of our company, we could lose visibility in the market, which in turn could cause the price of our common stock to decline.

Our share price may decline due to the large number of shares eligible for future sale and for exchange.

The market price of our common stock could decline as a result of sales of a large number of shares of common stock in the market after this offering or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. After the consummation of this offering, we will have         outstanding shares of common stock. All of the         shares of our common stock sold in this offering, or         shares of our common stock assuming the underwriters exercise in full their option to purchase additional shares of our common stock, will be freely tradable without restriction or further registration under the Securities Act by persons other than our “affiliates.” See “Shares eligible for future sale.”

The remaining         shares of our common stock outstanding held by our pre-IPO owners will be “restricted securities” within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. We will enter into a registration rights agreement that will require us to register these shares under the Securities Act. See “Shares eligible for future sale—Registration rights” and “Certain relationships and related person transactions—Registration rights agreement.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register common stock issued or reserved for issuance under our omnibus equity incentive plan. Any such Form S-8 registration statement will automatically become effective upon filing. Accordingly, shares registered under such registration statement will be available for sale in the open market, unless such shares are subject to vesting restrictions with us or the lock-up restrictions described below. We expect that the registration statement on Form S-8 will cover         shares.

We have agreed with the underwriters not to dispose of or hedge any of our common stock, subject to specified exceptions, during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters. See “Underwriting.” Subject to these agreements, we may issue and sell in the future additional shares of common stock.

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The market price of our common stock may be volatile, which could cause the value of your investment to decline.

Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our common stock could decrease significantly. You may be unable to resell your shares of our common stock at or above the initial public offering price.

Upon the listing of our shares on the        , we will be a “controlled company” within the meaning of the rules of the         and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of companies that are subject to such requirements.

Upon completion of this offering, JLL and DSM will enter into a shareholders agreement with us, pursuant to which each of JLL and DSM will be entitled to nominate a certain number of designees for election to our board of directors and will agree to vote in favor of each other’s nominees. As a result, we will be a “controlled company” under the rules of the        . Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements that (i) a majority of our board of directors consist of independent directors and (ii) that our board of directors have compensation and nominating and corporate governance committees composed entirely of independent directors, as independence is defined in Rule 10A-3 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, and under the listing standards.

For at least some period following this offering, we intend to utilize these exemptions. As a result, although we will have a fully independent audit committee, immediately following this offering we do not expect that the majority of our directors will be independent. Accordingly, although we may transition to a board with a majority of independent directors prior to the time we cease to be a “controlled company,” for such period of time you will not have the same protections afforded to shareholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a “controlled company” and our shares continue to be listed on the        , we will be required to comply with these provisions within the applicable transition periods.

The obligations associated with being a public company will require significant resources and management attention, which will increase our costs of operations and may divert focus from our business operations.

As a result of this offering, we will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. As a result, we will incur significant legal, accounting and other expenses that we did not previously incur. Once established, these controls may not achieve their intended objectives. Control processes that involve human diligence and compliance, such as our disclosure controls and procedures and internal control over financial reporting, are subject to lapses in judgment and breakdowns resulting from human failures. Controls can also be circumvented by collusion or improper management override. Because of such limitations, there are risks that material misstatements due to error or fraud may not be prevented or detected and that information may not be reported on a timely basis. If our controls are not effective, it could have a material adverse effect on our results of operations, financial condition, and market for our common stock, and could subject us to regulatory scrutiny.

Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will

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continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements.

We have identified a material weakness in our internal controls over financial reporting, and if we are unable to achieve and maintain effective internal control over financial reporting, this could have a material effect on our business.

Section 404 of the Sarbanes-Oxley Act requires management to make an annual assessment of the effectiveness of our internal control over financial reporting. In addition, a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting will also be required. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud or material error. Any failure to implement current internal controls or required new or improved controls, or difficulties encountered in their implementation could have a material adverse effect on our business and share price.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

In connection with the preparation of our consolidated financial statements for the year ended October 31, 2014, we identified a material weakness in our financial statement closing process. Specifically, a material adjustment was identified and recorded by management in order to properly state a restructuring accrual balance for our Venlo facility as of fiscal year-end. We have taken action to remediate this issue and will test the effectiveness of the remediation during our regular internal audit testing. However, if we do not successfully remediate this issue or if we fail to design and operate effective internal controls in the future, it could result in material misstatements in our financial statements, impair our ability to increase revenue, result in the loss of investor confidence in the reliability of our financial statements and subject us to regulatory scrutiny and sanctions, which in turn could harm the market value of our common stock.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify additional deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. Additionally, the existence of any future material weakness or significant deficiency, or the failure to remediate an existing material weakness or significant deficiency, requires management to devote substantial time and incur significant expense to remediate any such material weakness or significant deficiency and management may not be able to remediate any such material weaknesses or significant deficiency in a timely manner. Undetected material weaknesses in our internal controls could lead to financial statement restatements, which could have a material adverse effect on our business, financial condition and results of operations.

Provisions of our articles of association or Dutch corporate law might deter acquisition bids for us that might be considered favorable and prevent or frustrate any attempt to replace or remove our board.

Certain provisions of our articles of association may make it more difficult for a third party to acquire control of us or effect a change in our board. These provisions include: staggered three-year terms of our board members; a provision that our board may only be removed by the general meeting by a two-thirds majority of votes cast representing more than 50% of our outstanding share capital (unless the removal was proposed by the board); and a requirement that certain matters, including an amendment of our articles of association, may only be brought to our shareholders for a vote upon a proposal by our board that has been approved by our board.

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Holders of our common stock outside The Netherlands may not be able to exercise preemptive rights.

In the event of an increase in our share capital, holders of our common stock are generally entitled under Dutch law to full preemptive rights, unless these rights are excluded either by a resolution of the general meeting, or by a resolution of the board (if the board has been designated by the general meeting for this purpose). See “Description of capital stock—Preemptive rights.” Certain holders of our common stock outside The Netherlands, in particular U.S. holders of our common stock, may not be able to exercise preemptive rights unless a registration statement under the Securities Act of 1933, as amended, or Securities Act, is declared effective with respect to our common stock issuable upon exercise of such rights or an exemption from the registration requirements is available.

Upon the consummation of this offering, we will be a Dutch public company with limited liability. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.

Upon the consummation of this offering, we will be a Dutch public company with limited liability (naamloze vennootschap). Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in The Netherlands. The rights of shareholders and the responsibilities of members of our board may be different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board are required by Dutch law to consider the interests of our company, its shareholders, its employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder. See “Description of capital stock.”

We are not obligated to and do not comply with all of the best practice provisions of the Dutch Corporate Governance Code. This may affect your rights as a shareholder.

As a Dutch company we are subject to the Dutch Corporate Governance Code, or DCGC. The DCGC contains both principles and best practice provisions for boards, shareholders and general meetings, financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC is based on a “comply or explain” principle. Accordingly, public companies are required to disclose in their annual reports, filed in The Netherlands, whether they comply with the provisions of the DCGC. If they do not comply with those provisions (for example, because of a conflicting requirement), the company is required to give the reasons for such noncompliance. The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in The Netherlands or elsewhere. The principles and best practice provisions apply to our board (in relation to role and composition, conflicts of interest and independency requirements, board committees and remuneration), shareholders and the general meeting (for example, regarding anti-takeover protection and our obligations to provide information to its shareholders) and financial reporting (such as external auditor and internal audit requirements). We do not comply with all the best practice provisions of the DCGC. See “Description of capital stock—General meeting.” This may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.

Our declaration of dividends is within the discretion of our board and subject to certain limitations under Dutch law, and there can be no assurance that we will pay dividends.

Our dividend policy is within the discretion of our board and will depend upon various factors, including our results of operations, financial condition, capital requirements and investment opportunities. We can provide no assurance that we will pay dividends on our common stock. No dividends on our common stock will accrue in arrears. In addition, Dutch law contains certain restrictions on a company’s ability to pay cash dividends, and we can provide no assurance that those restrictions will not prevent us from paying a dividend in future periods. See “Dividend policy.”

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It may be difficult for you to obtain or enforce judgments against us or some of our executive officers and directors and some of our named experts in the United States or The Netherlands.

We were formed under the laws of The Netherlands. A significant portion of our assets are located outside the United States. As such, the rights of holders of our common stock and the civil liability of our directors will be governed by the laws of The Netherlands and our amended and restated articles of association and it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. Some of the named experts referred to in this prospectus are not residents of the United States and some of our directors and executive officers and some of our assets and some of the assets of our directors and executive officers are located outside the United States.

In the absence of an applicable convention between the United States and The Netherlands providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards and divorce decrees) in civil and commercial matters, a judgment rendered by a court in the United States will not automatically be recognized by the courts of The Netherlands. In principle, the courts of The Netherlands will be free to decide, at their own discretion, if and to what extent a judgment rendered by a court in the United States should be recognized in The Netherlands. In general terms, Dutch courts will generally recognize and give effect to the judgment insofar as it finds that:

the judgment was rendered by the foreign court that was (based on internationally accepted grounds) competent to take cognizance of the matter;
the judgment is the outcome of a proper judicial procedure (behoorlijke rechtspleging);
the judgment is not manifestly incompatible with the public policy (openbare orde) of The Netherlands; and
the judgment is not irreconcilable with a judgment of a Dutch court or an earlier judgment of a foreign court that is capable of being recognized in The Netherlands.

Without prejudice to the above, in order to obtain enforcement of a judgment rendered by a United States court in The Netherlands, a claim against the relevant party on the basis of such judgment should be brought before the competent court of The Netherlands. During the proceedings such court will assess, when requested, whether a foreign judgment meets the above conditions. In the affirmative, the court may order that substantive examination of the matter shall be dispensed with. In such case, the court will confine itself to an order reiterating the foreign judgment against the party against whom it had been obtained.

Otherwise, a new substantive examination will take place in the framework of the proceedings. In all of the above situations, when applying the law of any jurisdiction (including The Netherlands), Dutch courts may give effect to the mandatory rules of the laws of another country with which the situation has a close connection, if and insofar as, under the law of the latter country, those rules must be applied regardless of the law applicable to the contract or legal relationship. In considering whether to give effect to these mandatory rules of such third country, regard shall be given to the nature, purpose and the consequences of their application or non-application. Moreover, a Dutch court may give effect to the rules of the laws of The Netherlands in a situation where they are mandatory irrespective of the law otherwise applicable to the documents or legal relationship in question. The application of a rule of the law of any country that otherwise would govern an obligation may be refused by the courts of The Netherlands if such application is manifestly incompatible with the public policy (openbare orde) of The Netherlands.

Under our amended and restated articles of association, we will indemnify and hold our officers and directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our amended and restated articles of association, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of The Netherlands and subject to the jurisdiction of Dutch courts, unless those rights or obligations do not

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relate to or arise out of their capacities listed above. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the United States under U.S. securities laws, this provision could make judgments obtained outside of The Netherlands more difficult to have recognized and enforced against our assets in The Netherlands or jurisdictions that would apply Dutch law. Insofar as a release is deemed to represent a condition, stipulation or provision binding any person acquiring our common stock to waive compliance with any provision of the Securities Act or of the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, such release will be void.


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Cautionary note regarding forward-looking statements

This prospectus contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include, but are not limited to, those described under “Risk factors.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

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Use of proceeds

We estimate that the net proceeds from the sale of shares of our common stock that we are selling in this offering will be approximately $       , based on an initial public offering price of $        per share (which is the mid-point of the range on the cover of this prospectus), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ option to purchase additional shares from us is exercised in full, we estimate that we will receive additional net proceeds of approximately $        after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use approximately $    million of the net proceeds we receive from this offering to repay all or a portion of our Senior PIK Toggle Notes and pay related fees and expenses. The net proceeds from the offering of the Senior PIK Toggle Notes were used to pay a dividend of approximately $539.1 million to our shareholders and certain related transaction fees and expenses related to the offering of the Senior PIK Toggle Notes. The Senior PIK Toggle Notes mature on May 1, 2020 and the interest rate thereon is 8.75% per annum if interest is paid in cash or 9.50% per annum if interest is paid in the form of additional notes.

This expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including any proposed acquisitions. As a result, our management will retain broad discretion over the uses of the net proceeds in this offering and, as of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds.

We will not receive any proceeds from the sale of shares by the selling shareholders, including if the underwriters exercise their option to purchase additional shares from the selling shareholders.

A $1.00 increase (decrease) in the assumed initial public offering price per share would increase (decrease) the estimated net proceeds to us by approximately $        (or approximately $        if the underwriters exercise in full their option to purchase additional shares of common stock), assuming that the number of shares of common stock sold by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 100,000 shares in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by approximately $       , assuming that the assumed initial public offering price remains the same, and after deducting the underwriting discounts and commissions.

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Dividend policy

Following completion of this offering, our board of directors does not currently intend to pay dividends on our common stock. We intend to retain all available funds and any future earnings to fund the development and expansion of our business and debt service. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

We can provide no assurance that we will pay dividends on our common stock. No dividends on our common stock will accrue in arrears.

Under Dutch law, we may only pay distributions if our shareholders’ equity (eigen vermogen) exceeds the sum of the paid-up and called-up share capital plus the reserves required to be maintained by Dutch law or by our articles of association. Pursuant to our articles of association our board of directors may decide that part of the profits realized during a financial year can be set aside to increase and/or constitute reserves. The part of the profits not so allocated to reserves is at the free disposal of the general meeting which can decide that a distribution of such profit be made. Interim distribution can be made pursuant to a resolution of our board of directors, subject to the limitations relating to payments of preferential dividends described above and legal restrictions.

Interim distribution can be made pursuant to a resolution of our board of directors, subject to the limitations relating to payments of preferential dividends described above and legal restrictions. Should it be determined that any distribution made was not permitted, the shareholders or any other person entitled to profits must repay the dividends declared to the extent such shareholder or person was or ought to have been aware that the distribution was not permitted.

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Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of January 31, 2015, as follows:

on an actual basis;
on a pro forma basis to reflect the transactions described in “Unaudited pro forma consolidated financial information”; and
on a pro forma as adjusted basis to give effect to (i) the transactions described in “Unaudited pro forma consolidated financial information”; (ii) a $20.0 million U.S. dollar-denominated term loan and a €155.0 million euro-denominated term loan, or the Second Additional Term Loan Facilities, which were used to finance the IRIX Acquisition and for working capital and general corporate purposes; and (iii) the issuance and sale of common stock in this offering at an assumed initial public offering price of $        per share (the mid-point of the range on the cover of this prospectus) and the use of the proceeds therefrom received by us as described in “Use of proceeds,” after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table in conjunction with the sections entitled “Unaudited pro forma consolidated financial information,” “Management’s discussion and analysis of financial condition and results of operations” and the historical financial statements and related notes included elsewhere in this prospectus.

As of January 31, 2015
(in thousands, except share amounts) Actual Pro Forma Pro Forma
As Adjusted
Cash and cash equivalents
$
67.0
 
$
60.1
 
$
      
 
Long-term debt:
 
 
 
 
 
 
 
 
 
Term loan facilities(1)(2)
$
1,498.6
 
$
1,498.6
 
$
 
 
Revolving credit facility(3)
 
 
 
 
 
 
 
Senior unsecured notes(4)
 
450.0
 
 
450.0
 
 
 
 
Senior PIK Toggle Notes(5)
 
 
 
550.0
 
 
 
 
Other debt(6)
 
20.3
 
 
20.3
 
 
 
 
Total long-term debt
$
1,968.9
 
$
2,518.9
 
$
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
Members’ deficit:
 
 
 
 
 
 
 
 
 
Membership interest
$
542.6
 
$
542.6
 
$
 
 
Common stock, €0.01 par value per share: nil shares authorized, issued and outstanding, actual; nil shares authorized, issued and outstanding, pro forma;           shares authorized, shares issued and outstanding, pro forma as adjusted
 
 
 
 
 
 
 
Additional paid-in capital
 
 
 
 
 
 
 
Accumulated deficit
 
(898.2
)
 
(1,437.3
)
 
 
 
Accumulated other comprehensive loss
 
(72.7
)
 
(72.7
)
 
 
 
Total members’ deficit
$
(428.3
)
$
(967.4
)
$
 
 
Total capitalization
$
1,540.6
 
$
1,551.5
 
$
 
 

(1) The $1,330.0 million Initial Term Loan Facilities will mature on March 11, 2021 and are guaranteed on a senior secured basis by certain of our subsidiaries. Our Additional Term Loan Facilities will mature on March 11, 2021 and are issued or guaranteed on a senior secured basis by certain of our subsidiaries. The Additional Term Loan Facilities were fully drawn on September 29, 2014 and the proceeds and cash on hand were used to finance the Gallus Acquisition. The Additional Term Loan Facilities are comprised of a $160.0 million U.S. dollar-denominated term loan and a €70.0 million euro-denominated term loan. The Second Additional Term Loan Facilities will mature on March 11, 2021 and are guaranteed on a senior secured basis by certain of our subsidiaries. The Second

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Additional Term Loan Facilities were fully drawn on March 31, 2015 and the proceeds were used to finance the IRIX Acquisition and for working capital and general corporate purposes. The Second Additional Term Loan Facilities comprise a $20.0 million U.S. dollar-denominated term loan and a €155.0 million euro-denominated term loan.

(2) Excludes original issue discount of $14.3 million.

(3) The $200.0 million Revolving Credit Facility will mature on March 11, 2019 and is issued or guaranteed on a senior secured basis by certain of our subsidiaries. As of January 31, 2015 we would have had $185.1 million available for borrowings thereunder (after giving effect to approximately $14.9 million of letters of credit that were outstanding as of January 31, 2015).

(4) Represents $450.0 million aggregate principal amount of 7.5% senior unsecured notes due 2022 issued by our wholly-owned subsidiary in February 2014.

(5) Our subsidiary issued $550.0 million aggregate principal amount of Senior PIK Toggle Notes on May 6, 2015.

(6) Other debt consists of loans arranged or provided by (i) the Italian government in an aggregate principal amount of $7.6 million and (ii) the Austrian government in an aggregate principal amount of $4.9 million, in each case to finance business activities in those countries as well as a non-interest bearing seller financing incurred by Gallus in an aggregate principal amount of $4.0 million. Also includes Austria and Bourgoin capital leases for building and equipment of $1.4 million and insurance premium financing of $2.4 million.

A $1.00 increase (decrease) in the assumed initial public offering price of $        per share, would increase (decrease) the as adjusted amount of each of cash and cash equivalents, additional paid-in capital, and total capitalization by approximately $    million and decrease total shareholders’ deficit by approximately $    million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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Dilution

If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the existing equityholders.

Our pro forma net tangible book as of             , 2015 was approximately $    million, or $        per share of our common stock. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities and pro forma net tangible book value per share represents pro forma net tangible book value divided by the number of shares of common stock outstanding.

After giving effect to the sale of         shares of common stock in this offering at an assumed initial public offering price of $        per share (which is the mid-point of the range on the cover of this prospectus) our pro forma net tangible book value would have been $    million, or $        per share. This represents an immediate increase in net tangible book value (or a decrease in net tangible book deficit) of $        per share to existing equityholders and an immediate dilution in net tangible book value of $        per share to new investors.

The following table illustrates this dilution on a per share basis assuming the underwriters do not exercise their option to purchase additional shares:

Assumed initial public offering price per share
 
 
 
$
       
 
Pro forma net tangible book value per share as of             , 2015
$
       
 
 
 
 
Increase in pro forma net tangible book value per share attributable to new investors in this offering
 
 
 
 
 
 
Pro forma net tangible book value per share after this offering
 
 
 
 
 
 
Dilution in pro forma net tangible book value per share to new investors in this offering
 
 
 
$
 
 

A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) our total pro forma tangible book value by $    million, or $        per share, assuming that the number of shares of common stock offered, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and offering expenses payable by us.

The following table summarizes, on the same pro forma basis as of             , 2015, the total number of shares of common stock purchased from us, the total cash consideration paid to us and the average price per share paid by the existing equityholders and by new investors purchasing shares in this offering:

Shares Purchased
Total Consideration
Average
Price Per
Share
Number
%
Amount
%
Existing equityholders
 
       
 
 
       
 
$
       
 
 
       
 
$
       
 
New investors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
100
%
$
 
 
 
100
%
$
 
 

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Unaudited pro forma consolidated financial information

The following unaudited pro forma consolidated statements of operations for the fiscal year ended October 31, 2014 of Patheon Holdings Coöperatief U.A. have been prepared to give effect to the DPP Acquisition on March 10, 2014 and the Gallus Acquisition on September 29, 2014 in accordance with Accounting Standards Codification, or ASC, 805 “Business Combinations,” or ASC 805, as if each transaction had been consummated on November 1, 2013, and after giving effect to the adjustments described in the notes to the pro forma financial statements. The unaudited pro forma consolidated statement of operations for the fiscal year ended October 31, 2014, the unaudited pro forma consolidated statement of operations for the three months ended January 31, 2015 and the unaudited pro forma consolidated balance sheet as of January 31, 2015 below also give effect to the sale of our Banner Pharmacap’s facility in Mexico, or Banner Mexico, on May 12, 2015 and the expected spin-off of the BLS business, which was approved by our Board of Directors on March 31, 2015. In addition, the unaudited pro forma consolidated statement of operations for the fiscal year ended October 31, 2014, the unaudited pro forma consolidated statement of operations for the three months ended January 31, 2015 and the unaudited pro forma consolidated balance sheet as of January 31, 2015 below give effect to the issuance and sale on May 7, 2015 of the Senior PIK Toggle Notes by our indirect subsidiary, the net proceeds from which were used to pay a dividend of $539.1 million to our shareholders and $10.9 million in certain related transaction fees and expenses related to the offering. The Senior PIK Toggle Notes will be repaid with a portion of the net proceeds from this offering. See “Use of proceeds.”

The pro forma financial statements do not purport to represent what our results of operations or financial position would have been if the DPP Acquisition, the Gallus Acquisition, the sale of Banner Pharmacaps, the spin-off of the BLS business or the issuance of the Senior PIK Toggle Notes and the application of proceeds therefrom had occurred on the dates indicated above, nor do they purport to project our results of operations or financial position for any future period or as of any future date. The historical financial data has been adjusted to give pro forma effect to events that are (1) directly attributable to the transactions, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the consolidated results. The pro forma financial statements do not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may be achieved.

The unaudited pro forma consolidated statement of operations for the fiscal year ended October 31, 2014 was prepared by combining our audited consolidated statement of operations for the year ended October 31, 2014 with (i) the pro forma adjustments reflecting the results of DPP from November 1, 2013 to March 10, 2014, and (ii) with the pro forma adjustments reflecting the results of Gallus from November 1, 2013 through September 29, 2014. Because the consolidated financial statements of DPP were prepared in accordance with International Financial Reporting Standards, or IFRS, they are not directly comparable to our financial statements, which are prepared in accordance with Generally Accepted Accounting Principles in the United States, or U.S. GAAP. As a result, we have made adjustments to conform DPP’s consolidated financial statements with U.S. GAAP, as described in Note 3 below.

The unaudited consolidated pro forma financial statements are based upon assumptions and adjustments that we believe are reasonable. Such assumptions and adjustments are subject to change as future events materialize, and such changes may be material.

The unaudited pro forma consolidated financial statements should be read together with:

the accompanying notes to the unaudited pro forma consolidated financial statements;
our audited historical consolidated financial statements and accompanying notes as of October 31, 2014 and 2013 and for the three years ended October 31, 2014, included elsewhere in this prospectus;
our unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended January 31, 2015 and for the three months ended January 31, 2014, included elsewhere in this prospectus;

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DPP’s separate audited historical consolidated financial statements and accompanying notes as of December 31, 2013 and 2012 and for the three years then ended, included elsewhere in this prospectus; and
Gallus’s separate unaudited historical consolidated financial statements and accompanying notes as of June 30, 2014 and for the six months ended June 30, 2014 and 2013, as well as Gallus’s separate audited consolidated financial statements and accompanying notes as of and for year ended December 31, 2013, included elsewhere in this prospectus.

Unaudited pro forma consolidated statements of operations

Fiscal year ended October 31, 2014
(in millions of dollars) Consolidated
Patheon
Holdings
Coöperatief
U.A.)(1)
DPP
Business
(for the
period from
November 1,
2013 to
March 10,
2014)
Gallus
(for the
period from
November 1,
2013 to
September 29,
2014)
Acquisition
Related
Adjustments
Banner
Mexico
Disposition
BLS
Spin-off
Debt
Offering
Adjustments
Pro Forma
Consolidated
Patheon
Holdings
Coöperatief
U.A.
Revenues
$
1,704.8
 
$
280.0
 
$
66.7
 
$
 
$
(34.4
)
$
(40.3
)
$
 
$
1,976.8
 
Cost of goods sold (a)(b)
 
1,281.2
 
 
272.4
 
 
64.7
 
 
(15.3
)
 
(26.3
)
 
(1.5
)
 
 
 
1,575.2
 
Gross profit
 
423.6
 
 
7.6
 
 
2.0
 
 
15.3
 
 
(8.1
)
 
(38.8
)
 
 
 
401.6
 
Selling, general and administrative expenses (c)(d)
 
261.5
 
 
13.5
 
 
7.0
 
 
12.8
 
 
(9.2
)
 
(13.3
)
 
 
 
272.3
 
Research and development
 
15.1
 
 
0.5
 
 
 
 
 
 
(1.2
)
 
(9.6
)
 
 
 
4.8
 
Repositioning expenses
 
53.5
 
 
1.4
 
 
 
 
 
 
 
 
 
 
 
 
54.9
 
Acquisition and integration costs (e)
 
60.4
 
 
 
 
 
 
(59.7
)
 
(0.1
)
 
 
 
 
 
0.6
 
Impairment charges
 
22.1
 
 
185.9
 
 
 
 
 
 
 
 
(5.4
)
 
 
 
202.6
 
Gain on sale of fixed assets
 
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(0.1
)
Operating income (loss)
 
11.1
 
 
(193.7
)
 
(5.0
)
 
62.2
 
 
2.4
 
 
(10.5
)
 
 
 
(133.5
)
Interest expense, net (f)
 
90.4
 
 
0.5
 
 
1.1
 
 
25.5
 
 
0.2
 
 
 
 
49.9
 
 
167.6
 
Foreign exchange loss, net
 
8.7
 
 
 
 
 
 
 
 
(0.1
)
 
(0.2
)
 
 
 
8.4
 
Refinancing expenses (f)
 
28.2
 
 
 
 
 
 
(28.2
)
 
 
 
 
 
 
 
 
Other income, net
 
(1.1
)
 
(0.2
)
 
(0.6
)
 
 
 
 
 
 
 
 
 
(1.9
)
Loss from operations before income
taxes (g)
 
(115.1
)
 
(194.0
)
 
(5.5
)
 
64.9
 
 
2.3
 
 
(10.3
)
 
(49.9
)
 
(307.6
)
Provision for (benefit from) income taxes
 
4.1
 
 
(13.1
)
 
(2.1
)
 
21.8
 
 
0.4
 
 
(3.8
)
 
 
 
7.3
 
Net loss
$
(119.2
)
$
(180.9
)
$
(3.4
)
$
43.1
 
$
1.9
 
$
(6.5
)
$
(49.9
)
$
(314.9
)

(1) Includes DPP Business and Gallus from the respective dates of acquisition. See “Prospectus summary—Formation of our Company”.

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Three months ended January 31, 2015
(in millions of dollars) Consolidated
Patheon Holdings
Coöperatief U.A.
Acquisition
Related
Adjustments
Banner Mexico
Disposition
BLS
Spin-off
Debt
Offering
Adjustments
Pro forma
Consolidated
Patheon Holdings
Coöperatief U.A.
Revenues
$
488.8
 
$
 
$
(8.0
)
$
(8.2
)
$
 
$
472.6
 
Cost of goods sold
 
352.4
 
 
 
 
(5.7
)
 
2.9
 
 
 
 
349.6
 
Gross profit
 
136.4
 
 
 
 
(2.3
)
 
(11.1
)
 
 
 
123.0
 
Selling, general and administrative expenses
 
77.2
 
 
 
 
(1.8
)
 
(3.5
)
 
 
 
71.9
 
Research and development
 
3.9
 
 
 
 
(0.2
)
 
(2.3
)
 
 
 
1.4
 
Repositioning expenses
 
17.8
 
 
 
 
 
 
(1.0
)
 
 
 
16.8
 
Acquisition and integration costs
 
6.1
 
 
(4.7
)
 
 
 
 
 
 
 
1.4
 
Gain on sale of fixed assets
 
(0.1
)
 
 
 
 
 
 
 
 
 
(0.1
)
Operating income (loss)
 
31.5
 
 
4.7
 
 
(0.3
)
 
(4.3
)
 
 
 
31.6
 
Interest expense, net
 
28.0
 
 
 
 
 
 
 
 
12.5
 
 
40.5
 
Foreign exchange loss, net
 
3.9
 
 
 
 
0.2
 
 
 
 
 
 
4.1
 
Other income, net
 
(0.1
)
 
 
 
 
 
 
 
 
 
(0.1
)
Loss from operations before income taxes
 
(0.3
)
 
4.7
 
 
(0.5
)
 
(4.3
)
 
(12.5
)
 
(12.9
)
Provision for (benefit from) income taxes
 
5.8
 
 
1.8
 
 
 
 
(1.6
)
 
 
 
6.0
 
Net loss
$
(6.1
)
$
2.9
 
$
(0.5
)
$
(2.7
)
$
(12.5
)
$
(18.9
)

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Unaudited pro forma consolidated balance sheet

As of January 31, 2015
(in millions of dollars) Consolidated
Patheon
Holdings
Coöperatief
U.A. (a)
Banner
Mexico
Disposition (b)
BLS
Spin-off (b)
Debt
Offering (c)
Pro forma
Consolidated
Patheon
Holdings
Coöperatief
U.A.
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
67.0
 
$
(3.7
)
$
(3.2
)
$
 
$
60.1
 
Accounts receivable, net
 
339.1
 
 
(7.9
)
 
(31.2
)
 
 
 
300.0
 
Inventories
 
413.9
 
 
(6.2
)
 
(3.4
)
 
 
 
404.3
 
Income taxes receivable
 
1.3
 
 
(0.1
)
 
 
 
 
 
1.2
 
Prepaid expenses and other
 
19.6
 
 
(0.7
)
 
(0.4
)
 
 
 
18.5
 
Deferred tax assets - short-term
 
21.1
 
 
(0.9
)
 
 
 
 
 
20.2
 
Current assets held for sale
 
 
 
34.2
 
 
61.8
 
 
 
 
96.0
 
Total current assets
 
862.0
 
 
14.7
 
 
23.6
 
 
 
 
900.3
 
Capital assets
 
867.3
 
 
(6.2
)
 
(2.3
)
 
 
 
858.8
 
Intangible assets
 
248.6
 
 
(6.0
)
 
(10.2
)
 
 
 
232.4
 
Deferred financing costs
 
64.4
 
 
 
 
 
 
10.9
 
 
75.3
 
Deferred tax assets
 
3.1
 
 
0.4
 
 
 
 
 
 
3.5
 
Goodwill
 
166.8
 
 
(2.7
)
 
(11.1
)
 
 
 
153.0
 
Investments
 
14.3
 
 
 
 
 
 
 
 
14.3
 
Other long-term assets
 
19.8
 
 
(0.2
)
 
 
 
 
 
19.6
 
Total assets
$
2,246.3
 
$
 
$
 
$
10.9
 
$
2,257.2
 
Liabilities and members’ deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
$
2.4
 
$
 
$
 
$
 
$
2.4
 
Accounts payable and accrued liabilities
 
408.4
 
 
(4.1
)
 
(35.8
)
 
 
 
368.5
 
Income taxes payable
 
4.5
 
 
 
 
 
 
 
 
4.5
 
Deferred revenues - short-term
 
103.8
 
 
 
 
(0.5
)
 
 
 
103.3
 
Deferred tax liabilities - short-term
 
1.1
 
 
 
 
 
 
 
 
 
 
1.1
 
Current portion of long-term debt
 
23.3
 
 
 
 
 
 
 
 
23.3
 
Current liabilities related to assets held for
sale
 
 
 
5.5
 
 
41.5
 
 
 
 
47.0
 
Total current liabilities
 
543.5
 
 
1.4
 
 
5.2
 
 
 
 
550.1
 
Long-term debt
 
1,928.9
 
 
 
 
 
 
550.0
 
 
2,478.9
 
Deferred revenues
 
53.2
 
 
 
 
(0.8
)
 
 
 
52.4
 
Deferred tax liabilities
 
50.9
 
 
(0.5
)
 
(4.4
)
 
 
 
46.0
 
Other long-term liabilities
 
98.1
 
 
(0.9
)
 
 
 
 
 
97.2
 
Total liabilities
 
2,674.6
 
 
 
 
 
 
550.0
 
 
3,224.6
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Members’ deficit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Membership interest
 
542.6
 
 
 
 
 
 
 
 
542.6
 
Accumulated deficit
 
(898.2
)
 
 
 
 
 
(539.1
)
 
(1,437.3
)
Accumulated other comprehensive loss
 
(72.7
)
 
 
 
 
 
 
 
(72.7
)
Total members’ deficit
 
(428.3
)
 
 
 
 
 
(539.1
)
 
(967.4
)
Total liabilities and members’ deficit
$
2,246.3
 
$
 
$
 
$
10.9
 
$
2,257.2
 

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Notes to the unaudited pro form consolidated financial information

1. Pro forma adjustments to the unaudited consolidated statement of operations

The information included in the Patheon Holdings Coöperatief U.A. column reflects our historical statement of operations, prepared under U.S. GAAP and denominated in U.S. dollars, for the year ended October 31, 2014 and the three months ended January 31, 2015. The information included in the DPP column reflects its historical unaudited consolidated statement of operations for the period from November 1, 2013 through March 10, 2014, after the following adjustments:

Adjustments to derive U.S. GAAP amounts under Patheon Holdings Coöperatief U.A. presentation from the historical statement of operations of DPP prepared under IFRS, as further described in Note 3.
Conversion of the statement of operations of DPP, as adjusted to U.S. GAAP, from euros to U.S. dollars at rates ranging from $1.33 to $1.37 U.S. dollars per euro.

The historical financial information included in the Gallus column reflects its historical statement of operations prepared under U.S. GAAP and denominated in U.S. dollars for the period from November 1, 2013 to September 29, 2014.

The historical financial information in the BLS and Banner Mexico columns reflect their historical statements of operations prepared under U.S. GAAP and denominated in U.S. dollars for the fiscal year ended October 31, 2014, and the three months ended January 31, 2015.

The following adjustments were made to our consolidated fiscal 2014 and three months ended January 31, 2015 statements of operations which were prepared under U.S. GAAP and denominated in U.S. dollars:

a.Represents the reversal of fair value adjustments to inventory that was recorded in connection with the DPP purchase price allocation of $11.8 million, which was recorded as additional cost of goods sold within the statements of operations during the fiscal year ended October 31, 2014 as that inventory was sold during fiscal 2014.
b.Represents a net $3.5 million reduction in cost of goods sold resulting from a net decrease in depreciation expense related to the fair value adjustments to the acquired property and equipment of the DPP Business of $4.0 million, net of an additional $0.5 million of depreciation expense resulting from the increase in carrying value for Gallus property and equipment as a result of the fair value adjustments recorded in purchase accounting.
c.Represents the elimination of stock-based compensation and directors’ share unit expense of $5.1 million for fiscal 2014 related to the acceleration of vesting of Patheon Inc. stock options that occurred in connection with the DPP Acquisition offset by an increase in stock-based compensation expense of $8.5 million related to the management equity incentive plan, or MEIP. The Patheon Inc. stock option plan was terminated.
d.Represents $9.4 million in additional amortization of identifiable intangible assets acquired in fiscal 2014 in connection with the DPP Acquisition and Gallus Acquisition.
e.Represents the removal of acquisition-related costs incurred as a result of the DPP Acquisition and Gallus Acquisition for fiscal 2014 and the three months ended January 31, 2015.
f.Represents the pro forma adjustments resulting from the DPP Acquisition and the Senior PIK Toggle Notes, which consist of the following:
An increase in interest expense and amortization of deferred borrowings/issuance costs of $44.4 million for fiscal 2014, related to the DPP Acquisition;
A decrease in interest expense and amortization of deferred issuance costs of $18.9 million for fiscal 2014 related to the debt extinguished in connection with the DPP Acquisition;

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Removal of refinancing costs related to third-party and creditor fees expensed in connection with financing of the acquisitions; and
Addition of interest and amortization of deferred financing costs relating to the $550.0 million in Senior PIK Toggle Notes offered on May 6, 2015 of $49.9 million for fiscal 2014 and $12.5 million for the three months ended January 31, 2015.
g.Represents the tax impact of the pro forma adjustments listed in (a) through (f) above, based upon the applicable statutory rates by jurisdictions unless that jurisdiction was in a full valuation allowance position in which case there is no assumed tax impact.

2. Pro forma adjustments to the unaudited consolidated balance sheet

a.The January 31, 2015 historical balance sheet for Patheon Holdings Cooperatief U.A. includes the financial position of DPP and Gallus prepared under U.S. GAAP and denominated in U.S. dollars.
b.Reflects the amounts of assets and liabilities expected to be reclassified to assets and liabilities held for sale at cost or to be spun off and excluded from subsequent results. The assets held for sale are classified as short-term since the Banner Mexico disposition was completed on May 12, 2015 and the BLS spin-off transaction is expected to be completed within a twelve-month period.
c.Represents the $550.0 million in Senior PIK Toggle Notes due 2020 issued on May 6, 2015 along with transaction costs of $10.9 million and the use of $539.1 million to pay a dividend to the parent company as if they had occurred on January 31, 2015.

3. U.S. GAAP adjustments to unaudited DPP historical financial statements

(in millions of dollars) DPP Business for
the period from
November 1,
2013 through
March 10, 2014
IFRS
U.S. GAAP and
Reclassification
Adjustments for
the period from
November 1,
2013 through
March 10, 2014
DPP Business for
the period from
November 1,
2013 through
March 10, 2014
U.S. GAAP
Revenue (a)(e)
$
284.3
 
$
(4.3
)
$
280.0
 
Cost of goods sold (a)(e)(f)(g)
 
474.1
 
 
(201.7
)
 
272.4
 
Gross profit
 
(189.8
)
 
197.4
 
 
7.6
 
Selling, general and administrative expenses (g)(j)
 
5.2
 
 
8.3
 
 
13.5
 
Research and development
 
0.5
 
 
 
 
0.5
 
Repositioning expenses (b)
 
 
 
1.4
 
 
1.4
 
Impairment charges (f)
 
 
 
185.9
 
 
185.9
 
Operating loss
 
(195.5
)
 
1.8
 
 
(193.7
)
Interest expense (income), net (d)(h)
 
4.9
 
 
(4.4
)
 
0.5
 
Other (income) expense, net (c)
 
1.1
 
 
(1.3
)
 
(0.2
)
Loss from continuing operations before income taxes
 
(201.5
)
 
7.5
 
 
(194.0
)
(Benefit from) provision for income taxes (j)
 
(14.9
)
 
1.8
 
 
(13.1
)
Net loss
$
(186.6
)
$
5.7
 
$
(180.9
)

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The information in the above table illustrates the conversion of the DPP statement of operations for the period from November 1, 2013 through March 10, 2014 from IFRS to U.S. GAAP. The DPP statement of operations for the period was converted from euros into U.S. dollars at rates ranging from $1.33 to $1.37 U.S. dollars per euro. The information included in the “U.S. GAAP and Reclassification Adjustments for the period from November 1, 2013 through March 10, 2014” column reflects the following adjustments:

Adjustments to derive U.S. GAAP amounts from the historical statement of operations, prepared under IFRS, which include the following:
a.Under IFRS, DPP recognized revenue on certain transactions subject to bill-and-hold arrangements. Under U.S. GAAP, the criterion to recognize revenue on such transactions is more restrictive. As such, revenue was added to this period for U.S. GAAP reporting purposes when it was recorded in prior periods under IFRS. The impact was an increase to revenues of $3.1 million and an increase in cost of goods sold of $2.7 million for the period from November 1, 2013 through March 10, 2014.
b.Under IFRS, DPP recognized certain restructuring costs upfront at the time of approval whereas the timing of the recognition of certain elements of these costs should be recording during the period from November 1, 2013 through March 10, 2014 under U.S. GAAP. As such, restructuring expenses were added to this period for U.S. GAAP whereas it was recorded in prior periods under IFRS.
c.Represents the following components:
The elimination of amortization recorded for certain internally developed intangible assets held by an equity method investee of DPP, net of tax, of $0.9 million for the period from November 1, 2013 through March 10, 2014. Under IFRS, DPP capitalized development costs related to certain internally developed intangible assets and amortized such assets over their estimated useful lives. Under U.S. GAAP, such costs are expensed as incurred.
The reclassification of other expense, net to benefit from income taxes of $0.4 million for the fiscal 2014. Under IFRS, DPP presented the expense from income taxes related to an investment in an unconsolidated subsidiary in ‘Other expense, net.’ Under U.S. GAAP, such income tax expense must be presented in the benefit from income taxes within the statement of operations.
d.Under IFRS, all actuarial gains and losses are recognized in the statement of comprehensive income as they occur and the accumulated balance remains in the equity portion of the balance sheet; as such the gains/losses do not impact our profits and losses. In accordance with U.S. GAAP and our accounting policies, a portion of the gains/losses deferred in accumulated other comprehensive income was amortized to the profits and losses, in accordance with the accounting prescribed by the “corridor” approach.
e.Related to the reclassification of revenues from the sale of steam from revenues to cost of goods sold as this item is a reimbursement of costs from a shared DPP manufacturing facility rather than a part of Patheon Holdings Coöperatief U.A.’s core business. The impact of this reclassification was approximately $7.4 million for the period from November 1, 2013 through March 10, 2014.
f.Related to the reclassification of the December 2013 impairment of goodwill and capital assets totaling $185.9 million from cost of goods sold to impairment charges on the statement of operations for fiscal 2014.
g.Related to the reclassification of certain costs such as site costs for operating their information technology, finance and human resources departments from cost of goods sold to selling, general and administrative expenses to comply with Patheon Holdings Coöperatief U.A. policy. The impact was approximately $11.1 million for the period from November 1, 2013 through March 10, 2014.

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h.Adjustment to remove interest on intercompany debt with DSM that was not acquired as a result of the DPP Acquisition.
i.Relates to a reimbursement of certain restructuring charges by DSM of $2.8 million during the period November 1, 2013 through March 10, 2014.
j.Represents the impact of the pro forma adjustments listed above on the provision for income taxes for the period from November 1, 2013 through March 10, 2014 based on various statutory rates.

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Selected consolidated historical financial data

The following table presents our selected consolidated historical financial data as of the dates and for the periods presented. The selected consolidated historical financial data as of October 31, 2014 and 2013 and for the years ended October 31, 2014, 2013 and 2012 have been derived from our consolidated financial statements included elsewhere in this prospectus. From an accounting standpoint, Patheon Inc. was the acquirer and as such all financial information prior to March 11, 2014 is related to Patheon Inc. The balance sheet data as of January 31, 2014, October 31, 2012, 2011 and 2010 and the statement of operations data for the years ended October 31, 2011 and 2010 are derived from consolidated financial statements not included in this prospectus. The selected consolidated historical financial statements as of January 31, 2015 and for the three months ended January 31, 2015 and 2014 are derived from our interim consolidated financial statements included elsewhere in this prospectus. We have prepared our interim consolidated financial statements on the same basis as our annual consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.

You should read this information together with the information included under the headings “Risk factors,” “Capitalization,” “Unaudited pro forma consolidated financial information,” “Management’s discussion and analysis of financial condition and results of operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.

We were incorporated in The Netherlands on December 24, 2013, in the form of a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid), by a partnership between JLL and DSM in connection with the acquisition of Patheon Inc., a Canadian company listed on the Toronto Stock Exchange, for approximately $1.4 billion in cash. Following the DPP Acquisition, which was consummated on March 11, 2014, Patheon Inc. and DPP became our wholly owned indirect subsidiaries. From an accounting standpoint, Patheon Inc. was the acquirer and as such all financial information prior to March 11, 2014 is related to Patheon Inc.

Three months ended
January 31,
Year ended October 31,
(in millions of dollars)