Water Street Healthcare Partners, a strategic investor focused exclusively on the healthcare industry headquartered in Chicago, has invested in Custopharm, a generic injectable drug services company. Water Street's team has committed equity to both acquire and expand the Carlsbad, Calif.-based company. The healthcare firm has recruited William Larkins, Ph.D., former vice president and general manager of Bedford Laboratories, as CEO of Custopharm.

"Water Street's partnership with us is much greater than a financial one," said Dave McCleary, co-founder and president, Custopharm. "Over the past year, its team has worked with us to develop a strategic plan and engage an experienced leader who will help us build Custopharm into a premier provider of generic injectable drug services."

Custopharm specializes in generic injectable product development and regulatory consulting services. Its team of scientists has completed formulation and methods work on a range of generic injectable products. The company has drafted and filed hundreds of abbreviated new drug applications (ANDAs) on behalf of its customers. Founded in 2005, Custopharm has worked with more than 100 organizations across the pharmaceutical industry.

"Generic injectable products are a multi-billion dollar industry growing at a double-digit annual rate," said Alan Heller, operating partner, Water Street. "Custopharm excels at sourcing materials and completing formulations to develop high-quality generic injectable products. We will expand the company's development capabilities and regulatory consulting services to meet the increasing demand for generic injectable products as more branded drugs come off patent."

Heller, who has more than 35 years of leadership experience in life sciences, will become chairman of Custopharm. Previously, he was president and CEO of American Pharmaceutical Partners (APPI). Dan Robins, Ph.D., and George Zorich also will join the board of directors.

Custopharm is Water Street's sixth investment in the pharmaceutical sector in the past six years. In 2013, Water Street partnered with a pharmaceutical company to create the drug development company Celerity Pharmaceuticals. It also invested in Temptime, which specializes in time-temperature indicators for medical products. Last year, the healthcare firm merged BioClinica, and CCBR-SYNARC to create a global provider of specialty outsourced clinical trial services.

Water Street also owned AAIPharma Services, now part of Cambridge Major Laboratories and OraPharma, which was acquired by Valeant Pharmaceuticals International in 2012.

Water Street is continuing to seek new opportunities to partner with middle-market companies interested in achieving next-level growth and corporations considering divesting non-core healthcare businesses. The firm targets investments ranging from $50 to $500 million in four healthcare sectors: specialty distribution, medical and diagnostic products, healthcare services and pharmaceutical products and services.