CRO consolidation continues as ICON invests $ 12 billion for PRA Health Sciences

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ICON has agreed to acquire PRA Health Sciences for approximately $ 12 billion in cash and shares, the companies said, as ICON seeks to expand its ability to provide decentralized and hybrid testing solutions integrating data from platforms. -mobile and connected health forms, as well as a network of trial sites, home health services and wearable devices.

This need for virtual clinical trials has intensified, the companies said, in the wake of the global pandemic, which has seen a move up to scale among competing contract research organizations (CROs) and motivated consolidation.

“COVID-19 has created a platform for change that we cannot ignore,” PRA CEO Colin Shannon said in a statement. “The pandemic has accelerated the adoption of mobile health technologies and healthcare intelligence tools, tools that PRA has helped develop, at an unprecedented rate. “

In response to COVID-19, PRA launched a COVID-19 clinical trial support mobile app designed to virtually connect patients around the world to clinical trial sites and healthcare professionals from anywhere through their mobile device. PRA has also mobilized its Vaccine Research Center, which is applying data to improve clinical trial design, site selection and recruitment forecasting. The company has participated in Phase I-IV clinical studies that have evaluated more than 72,000 combined COVID-19 patients at more than 700 sites around the world.

Last year, ICON provided clinical trial services for BNT162b2, mRNA COVID-19[female[feminine vaccine that Pfizer and BioNTech have encouraged to emergency use authorization in the United States, as well as in Europe. ICON announced on Jan. 4 that it was working with 153 sites in the United States, Europe, South Africa and Latin America to recruit more than 44,000 participants in the four-month trials. ICON provided onsite training, document management, and operational support for the review of the patient informed consent form, coordinated electronic consent in most countries, and contributed to clinical supply management services.

Pfizer is one of ICON’s most enduring pharmaceutical clients, the CRO providing clinical trial services to the pharmaceutical giant for 30 years. The companies formed a strategic relationship in 2011, enabling ICON to provide Pfizer with global expertise in the planning, execution, management and conduct of clinical trials.

Decreased income

While COVID-19 cemented ICON’s relationship with Pfizer, the global pandemic has slowed enough clinical trial activity in other therapeutic areas, with 65% of ICON’s global sites affected. ICON withdrew its investor guidance for 2020 in April and saw revenue decline 10.8% year-over-year to $ 620 million in the second quarter.

Business rebounded in the second half of last year for ICON to end the fourth quarter with a 1.4% year-over-year gain to $ 101.234 million from $ 99.861 million. Revenue increased nearly 5% to $ 760.229 million from $ 725.409 million.

Yet ICON still ended 2020 with a 7.2% drop in net income from 2019, to $ 348.792 million from $ 375.856 million. Revenue last year fell 0.3% to $ 2.797 billion from $ 2.806 billion.

Like ICON, PRA withdrew its guidelines for 2020 as COVID-19 wreaked havoc in global clinical trials. Like ICON, PRA saw its bottom line and revenue decline in the fourth quarter and last year. PRA ended 2020 with a fourth quarter net profit of $ 51.257 million, down 31.5% from $ 74.801 million a year earlier. For all of last year, PRA reported net income of $ 197.043 million, down 19% from $ 243.119 million in 2019.

However, PRA was able to continue to increase its income. In the fourth quarter, the company generated $ 873.458 million, up 9% from $ 800.24 million, while for the whole of 2020, PRA’s revenue grew nearly 4% , to $ 3.183 billion against $ 3.066 billion in 2019.

PRA, based in the United States, provides outsourced clinical development and data solutions services to the biopharmacy. PRA’s global clinical development operations include more than 75 offices in North America, Europe, Asia, Latin America, Africa, Australia and the Middle East, and approximately 19,000 employees worldwide. PRA said it has participated in approximately 4,000 clinical trials around the world since 2000.

ICON, based in Ireland, is a global provider of outsourced drug and device development and marketing services to pharmaceutical, biotechnology, medical device, government agency and public health companies. ICON also specializes in the strategic development, management and analysis of programs that support clinical development, from compound selection to phase I-IV clinical studies.

As of December 31, ICON employed approximately 16,000 employees at 93 sites in 41 countries.

Growth platform

ICON and PRA have pledged that their combined company will build a platform for growth and innovation by being the leader or number two in key clinical market segments, and build on strategic partnerships formed with most of the 20 largest biopharmaceutical companies.

“We will be the leading provider of decentralized and hybrid testing solutions through the integration of our data capabilities, healthcare platforms and the Accellacare network of sites,” promised ICON CEO Steve Cutler, PhD . “With a larger and deeper operational scale combined with innovative technology and real-world data solutions, we will enable all customers to reduce their development time and costs. “

The combined company’s customers, according to ICON and PRA, would benefit from an increased functional, geographic and therapeutic scale as well as extensive technological innovation in healthcare.

PRA investors reported approval of the deal, with shares of the company climbing nearly 19% yesterday to $ 151.66 before falling 2% to $ 148.50 per share after hours trading at 5:32 p.m.

However, Icon shares fell 7.77%, to $ 192.41 from Tuesday’s close of $ 208.62, a price that remained unchanged after hours of trading.

In a research note reported by Reuters, Elizabeth Anderson, healthcare technology and distribution analyst at Evercore ISI, noted that ICON and PRA have attracted predominantly different clients in the biopharmaceutical industry: “Despite their relative sizes, the low customer overlap between the two should help reduce the risk of integration.

ICON said it expected its acquisition of PRA to generate double-digit growth in the first full year after the companies merged, followed by growth of more than 20% each thereafter. This forecast partly reflects a drop in the combined effective corporate tax rate to 14% as ICON is headquartered in Dublin at the Leopardstown campus, while PRA is based in Raleigh, North Carolina.

Another factor in ICON’s pink growth forecast: The combined company expects to achieve cost reductions and other synergies totaling $ 150 million per year.

The combined company will remain based in Dublin and will be led by CEO Cutler and CFO Brendan Brennan, who now hold identical roles at ICON.

Ciaran Murray, the non-executive chairman of the board of ICON, will serve as chairman of the merged company.

Shannon will join the board of directors upon closing of the transaction, as will another member of PRA’s board of directors.

“People, data and technology”

“The union of PRA and ICON will create an organization that will have the people, data and technology to bring these treatments to patients faster and more efficiently than ever before,” said Shannon.

ICON agreed to acquire PRA for $ 80 per share in cash — a premium of about 30% above PRA’s closing price on Tuesday of $ 127.73 — and 0.4125 ICON share. ICON said it intended to fund the cash portion of the transaction through a combination of cash on hand and fully committed debt consolidation from Citi.

ICON ended 2020 with $ 842.034 million in cash and short-term investments, and a net cash position after debt subtraction of $ 493.557 million, the highest cash position ever recorded by the company and more double the net cash position of $ 220.297 million reported as at December 31. 2019.

The operation is not subject to any financing condition.

Upon completion of the acquisition, PRA shareholders will own approximately 34% of the shares of the merged company, with ICON shareholders holding a controlling stake of approximately 66%.

The boards of directors of both companies have approved the transaction, which is expected to close in the third quarter, subject to regulatory and shareholder approvals and customary closing conditions.

“The combined company will create a new paradigm for accelerating clinical research and bringing new drugs and devices to market,” added Cutler. “ICON and PRA both have a track record of robust growth and performance and we are ready to build on this unmatched position of strength, utilizing the exceptional talents of both organizations. “

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