Sector News

INC Research and inVentiv Health merge in another major CRO deal

December 27, 2017
Life sciences

Quintiles and IMS Health came together last year in a massive $19 billion megamerger, and now INC and inVentiv are looking to follow suit, combining into one new major company that will according to the pair make it the second largest biopharmaceutical outsourcing provider in the world.

The Raleigh and Boston-based CROs said in an unexpected statement this morning that the two will become one, and that their boards of directors have “unanimously approved a definitive merger agreement pursuant to which their businesses would combine in an all-stock transaction, creating a leading global biopharmaceutical solutions organization.”

Based on yesterday’s stock, inVentiv is believed to have an enterprise value of around $4.6 billion, with the combined company set to be worth around $7.4 billion, the pair said.

As with the QuintilesIMS merger, things are not however absolutely equal: When the deal is done, INC’s shareholders are expected to own 53% of the combined company, while inVentiv shareholders will get 47%.

Advent International and Thomas H. Lee Partners, two private equity firms that are currently equal equity owners of inVentiv, are also set to remain investors in the new company.

Alistair Macdonald, CEO of INC (and only became chief last October, taking over from another Macdonald) will become the new chief of the merged company, with inVentiv’s CEO Michael Bell becoming executive chairman.

The newco will also headquartered in Raleigh, North Carolina (where INC is based) with a “significant presence in the Northeast corridor of the United States, and operations worldwide, including in Asia and Europe,” according to a statement.

In December, INC had in fact announced plans to move its headquarters to a new site in North Carolina, investing $38 million and add 550 jobs over the next five years.

The plans were designed to move INC Research’s 1,000 or so employees from the current Raleigh, North Carolina-based headquarters to the nearby Perimeter Park office complex in Morrisville, North Carolina, and as a result, allow the CRO to house all its 1,375 workers in one place.

The company planned to move its headquarters in mid-2018, while the hiring has already started.

Macdonald said: “Today marks a significant milestone for INC Research. Customers are increasingly seeking simultaneous approvals and product launches in multiple markets worldwide. Through this strategic combination, we are bringing together two of the most innovative and respected players in the field to create a leading global biopharma solutions organization with a full suite of clinical and commercial solutions to address the needs of biopharmaceutical companies, patients, physicians and payers. The combination of INC Research and inVentiv will expand our global scale and add capabilities to grow our addressable market.”

Bell added: “As biopharmaceutical companies of all sizes face increasingly complex challenges to bring products to market, they are seeking comprehensive outsourced solutions across the clinical and commercial spectrum. The new company is purpose-built to address market realities where clinical and commercial must work together, sharing expertise, data and insights, to improve client performance.

“We believe this merger has significant client advantages as it deepens our scale, scope and therapeutic expertise. We have long-admired INC Research, and this is an exciting opportunity to bring together two best-in-class, industry-leading teams who share the commitment to shorten the distance from lab to life.”

The deal comes as biopharma M&As have cooled over the past 18 months, with only a few exceptions such as Pfizer’s $14 billion Medivation buy, but the CRO and outsourcing industry has been burning brightly, with deals, mergers, combinations and tie-ups the order of the day.

The hope is that together, INC-inVentiv will be able to earn more money through greater offerings to its combined clients, upping its clinical scale and therapeutic depth, all in order to tackle the “increasingly complex biopharmaceutical development and commercialization environment.”

Last August, inVentiv pulled out of a planned IPO, which could have been worth $500 million, after receiving a major investment from buyout firm Advent, and came after rumors, ones that have also hovered around INC for years, that it was to be bought out.

A spokesman for inVentiv told FierceCRO at the time that Advent was not looking to make any changes to the CRO’s business model and was investing because of the opportunities it sees for growth from its long-term biz plan.

Founded in 1985, INC moved to Raleigh, North Carolina, in 2000 and currently employs more than 6,700 employees in about 50 countries worldwide, and its business footprints cover more than 110 countries.

It has been focusing on offering clinical development services in therapeutic areas including central nervous system, oncology, cardiovascular, and respiratory diseases. The company went public with an IPO in 2014, with 8.1 million shares of common stock offered to the public at a price of $18.50 per share. It was up more than 16% on the news of the merger this morning.

By Ben Adams

Source: Fierce Biotech

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