Bain Capital, the private equity firm branded a "job destroyer" in the US presidential elections, has bought a majority stake in the state-owned blood products firm Plasma Resources UK.

Lord Owen, a former Labour health minister in the 1970s, who created a service to make the UK self-sufficient in blood supplies, said it was "hard to conceive of a worse outcome" than the £200m sale of an 80% stake in the Hertfordshire-based company to private equity. The Department of Health will retain a 20% share in the business.

Plasma Resources UK turns plasma - the watery fluid in blood that carries the white and red cells - into life-saving treatments for immune deficiencies, neurological diseases and haemophilia.

Since the firm was created by the Labour government in 2002 to maintain a steady supply of blood products, all plasma has been collected from US donors because of the theoretical risk of contamination with variant Creutzfeldt-Jakob disease, the human form of BSE, which cannot be reliably tested for.

Under the deal announced on Thursday, Bain Capital has agreed to pay £90m upfront, with a deferred payment "expected to be worth £110m" due in five years' time.

The US private equity firm, which was founded in 1984 by former Republican presidential candidate Mitt Romney, has promised to invest £50m in PRUK to increase production, refurbish facilities and develop new products. It has also pledged to keep the company's headquarters in the UK.

Bain Capital shot to notoriety in the US presidential elections, when Barack Obama's team made Mitt Romney's tenure at Bain a centrepiece of its campaign against the Republican candidate, accusing him and the company of shredding jobs in the American heartland. Romney made his fortune at Bain but left the company at least a decade before the presidential election.

The sale of the 80% stake adds to the growing list of privatisations now underway, including the Royal Mail, Search and Rescue, which will be taken over in 2015, and a tranche of the student loans book.

Health Minister Dan Poulter said the deal, which values PRUK at £230m, will "ensure that patients will have access to high quality plasma products for years to come".

"Bain Capital was chosen following a fair and open competitive process which looked at who offered the best deal for patients and to ensure future employment at the company."

But Lord Owen, the crossbench peer, blasted the deal. "It's hard to conceive of a worse outcome for a sale of this particularly sensitive national health asset than a private equity company with none of the safeguards in terms of governance of a publicly quoted company and being answerable to shareholders. Private equity has a useful function, as I saw in years past on the advisory board of Terra Firma, but Bain Capital should not have been chosen for this sale."

"Is there no limit to what and how this coalition government will privatise?"

In March the peer warned prime minister David Cameron that he would be foolish to allow the sale of PRUK, which he described as "an excellent insurance policy for the NHS" that ensures the integrity of plasma supplies. A privatised company posed risks of contaminated plasma, he suggested. "The worldwide plasma supply line has in the past been contaminated ... We in this country should do everything in our power to avoid being reliant on open market tendering processes for NHS patients." Professor Allyson Pollock, professor of public health research and policy at Queen Mary University London, said there was "not a shred of evidence" to support government claims that private firms would boost innovation in plasma treatments.

"Where is the evidence that when you use venture capital such as Bain Capital that they invest and they don't asset strip?" she said. Innovation in the NHS and its blood supply services was at risk as a result of the deal, she said.

The sale illustrated "why we are concerned at the way that NHS and NHS associated products are being denationalised and privatised and put out to the market place as a source of profit rather than responding to patient needs."

Devin O'Reilly, managing director of Bain Capital in London and leader of the firm's healthcare team in Europe, said: "We are excited about the prospects of PRUK in the growing plasma products industry and are committed to investing in the company to help it reach its full potential in this global market."