Pharmaceutical Product Development Inc., a global contract research organization that provides outsourced contract research services to pharmaceutical and biotech companies, is considering selling the company, according to some people who are close to the matter.
The Wilmington, N.C. based PPD has a market capitalization of approximately $3.2 billion. It could attract bids from private-equity investors as well as other large contract research organizations. All this seems to be fluid right now, and the company could also change their plan, say the sources.
Earlier this year, PRA International Inc., a privately owned competitor of PPD, put itself for sale. Genstar Capital that owns PRA is seeking $1 billion, as quoted by sources close to the matter. PRA’s headquarter is in Raleigh, N.C., two hours away from that of PPD’s headquarters, both falling in the “research triangle”. Spokespeople for PRA and Genstar declines to comment. PPD also didn’t respond to requests for comments.
Contract-research organizations ( CROs) such as PRA and PPD serve pharmaceutical and biotechnology companies, academic institutions and government organizations with drug and medical device research services. CROs assist their clients to design studies and management of clinical trials in their various stages. They also help with recruitment of patients and volunteers for these studies. Many CROs have advanced laboratories for testing, and other systems to help monitor clinical data and safety standards. Some CROs assist with preclinical services.
Medical research has become a costly endeavor in recent years. Besides increasing cost, the research and development has become complex. This has led to an outsourcing model in which CROs have thrived in the past many years. However, many such companies have seen their earnings plummeting in the last couple years due to pharmaceutical companies reducing their research spending post-recession.
We have witnessed deal-making among many CRO firms recently, including acquisitions and mergers. PPD bought BioDuro LLC in 2009 to increase their reach in China. In 2010, Charles River Laboratories International Inc. reached an agreement with China’s Wuxi PharmaTech at $1.6 billion but the deal was later scuttled by investors.
Founded in 1985 by Fred Eshelman, PPD posted $1.5 billion in 2010 revenue. The company employs more than 11,000 people and has built worldwide infrastructure and systems to conduct multinational clinical trials, according to its Web site.
PRA International was founded in 1976 and was taken private by Genstar in 2007 for approximately $700 million.
Source: The Wall Street Journal