Encorium Group has acquired Switzerland-based Progenitor International Research, a niche provider of drug development services in emerging regions, which allows the company to expand its vaccine development services into South America, India and Asia Pacific.

The deal, which includes an earn-out consideration of cash and stock if post-closing goals are met, is worth a potential $4.1 million and includes the acquisition of Progenitor’s units in Mexico, Panama, Argentina, Chile, Switzerland, India and Hong Kong. 

The Finland-based Encorium considers Progenitor’s geographic reach and vaccine expertise a good fit for its new strategic focus. The global CRO reorganized its operations last year, divesting its U.S. business and specializing in vaccine services, after the company’s revenues fell due to cancellations and falling demand. 

By refocusing on vaccine development, which has become one of the fastest-growing sector in the life-sciences industry, Encorium expects to differentiate itself from its competition. The recent consolidation in pharma, along with the increasing trend for drug sponsors to outsource substantial aspects of their development work to a single service-provider, has reduced the number of opportunities available to mid-sized CROs. 

“The environment has been changing tremendously during the last year or two years. The mergers and acquisitions have been one of the factors along with the downturn in the economy,” said Kai Lindevall, M.D., Ph.D., CEO of Encorium Group. “The focus on vaccines was a strategic decision. When you are a medium-sized CRO, you need to find a niche segment for growth. Since we have been involved in vaccine clinical trials since 1998, it was quite easy for us to choose our niche area.” 

The repositioned Encorium Group has reported more than $15 million in new contracts during the past 10 months, including a deal with a major pharmaceutical for the development of an H1N1 vaccine. In fact, Lindevall said that Encorium increased its vaccine business 150% during 2009 compared with 2008. 

Progenitor, which has conducted more than 20 vaccine trials in emerging regions, will not only strengthen Encorium’s vaccine expertise, but the acquisition allows the CRO to increase its capabilities in South America, India and Asia-Pacific. Lindevall regards this expansion into emerging markets as an important element of the company’s vaccine development strategy. 

“The clue is to help the industry to create networks of clinics and investigators in order to facilitate the recruitment of patients, to get faster recruitment. That is one of the most important things,” said Encorium’s Lindevall. “The acquisition is a key advancement of our strategic goal of becoming more specialized in clinical trial design and delivery and moving to become the world’s leading vaccine CRO.” 

The company also has put additional resources toward developing its vaccine niche by hiring a world-class expert who was involved in global vaccine development for the World Health Organization and developing technologies to help facilitate vaccine trials. 

The two founders of Progenitor, Renée Moore, Ph.D., and Klaus D. Albrecht, will join the executive team at Encorium. “The strategic combination of the teams at Encorium and Progenitor is an exciting step in the creation of a vaccine-focused CRO that can meet client’s needs internationally,” said Moore, who is president and CEO of Progenitor. 

Together the two companies have been involved in more than 70 vaccine and infectious disease studies involving more than 50,000 patients.