The CRO side of the drug development business has been consolidating at a rapid pace over the last 12 months. And inVentiv Health is helping accelerate that trend with the news that it is snapping up PharmaNet, its second buyout in just four months.
The deal gives inVentiv a CRO operation with services in the U.S., Europe as well as Asia, extending its overall reach to 40 countries. And it comes at a time developers of all sizes increasingly turn to outsourcing as an effective approach to cutting down on costs as CROs like inVentiv scale up to compete with the biggest operators in the business.
"If you lump i3 (the CRO division of Ingenix acquired last January) and PharmaNet together," inVentiv CEO Paul Meister tells FierceBiotech, the buyouts bring the company's total revenue--which includes commercial and consulting work--up to $1.5 billion-$2 billion from a base of a billion dollars. Combined CRO revenue will approach $900 million.
The deal also highlights the ongoing shakeout in the CRO business. Just a year ago a private equity group acquired inVentiv, just as a separate private equity group snapped up INC Research--which recently announced a deal to buy Kendle for $232 million.
"Two separate things are happening at the same time," says Meister. "There's a drive for consolidation in the CRO marketplace broadly, driven largely by customer dynamics. Pharma is buying pharma and biotechs. So clients are consolidating at the same time trials are getting bigger and an extensive global scale becomes increasingly important on the provider side. That set up the environment. And private equity broadly speaking moves into industries in transition."
None of this comes as any surprise to analysts who cover the CRO business. A little more than a year ago a trio of top analysts took to center stage at a CRO conference to predict a big wave of new deals. And analysts expect more deals will follow in the year ahead.
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