Combining a change in financial owner-ship with overseas expansion plans, Synexus, one of the largest international investigative site networks, has set its sights on acquiring or partnering with an undisclosed number of U.S. investigative sites this year.
The Manchester, U.K.-based company, which owns 25 dedicated research sites in eight countries including the U.K., Germany, Poland, Ukraine and South Africa, views the U.S. market as vital in providing biopharmaceutical sponsors with an international reach for their clinical trials.
“We are limited by our existing footprint, and the U.S. market, where more than 40% of clinical trials are conducted, provides our customers—sponsors and CROs—with an international ca-pability for large trials,” said Christophe Berthoux, M.D., Synexus CEO. “For us, in Europe, you can only start a trial after the U.S. launch. With a U.S. presence we can start the trial first.”
Synexus’ U.S. site shopping plans follow a change in financial control. Lyceum Capital, which has owned Synexus since 2007, has sold the company to the management team, led by Berthoux, and private equity investor Lloyds Development Group (LDC), part of Lloyds Banking Group.
Financial terms were not disclosed, but the London Telegraph and other British newspapers suggested Synexus management and LDC paid Lyceum approximately $128 million.
“LDC can accelerate our growth, and we have a strategic plan for the next few years,” said Berthoux.
Asked what he is looking for in U.S. sites, Berthoux said unlike his company’s outright ownership of sites in Europe, Synexus is more likely to partner with existing sites. He is seeking experienced sites that produce quality data from their trials and have solid reputations in patient recruitment. He said he still is learning about the U.S. market.
“We know the importance of understanding the U.S. market, the medical environment and especially reimbursements, where working with insurance providers is very different,” said Berthoux. “We are looking for the right partner and a cultural fit with international plans to grow. We seek U.S. sites that have a potential to grow and are very patient-centric, to where the experience was so positive patients may want to consider entering a second clinical trial.”
As for entering the U.S. market in 2015, Berthoux said his biggest competitors are private equity companies, which also see further consolidation of the highly fragmented investigative site market.
Synexus’ search for U.S. sites comes after continuing strong financial results throughout the industry in the past two years due, in part, to a growing economy, according to Mark Lacy, founder and CEO of Texas-based site network Benchmark Research.
“I believe his group, with its multi-site experience in different countries, can address the challenges it might face in the U.S. market, as he has run a smart company backed by major capital,” said Lacy. “However, unlike previous years, I am more skeptical in 2015 and beyond for the overall U.S. site business.”
His reasons stem from the number of complex drugs that will be entering clinical trials, requiring more end-points and creating a challenge in finding qualified patients. U.S. sites also will face receiving less compensation from sponsors given the work they will need to perform to meet complex trial requirements. Thirdly, there is an ongoing decline in the number of Principal Investigators, many of whom are getting older and closing their private practices.
“Those are some of the issues Berthoux will face,” said Lacy. Increasingly, he added, smaller physician-owned sites will be acquired by hospital groups, insurance companies and urgent care networks and, as a group, those PIs will become employees of those organizations.
Asked if Benchmark would be open to shared ownership with Synexus, Lacy said his firm doesn’t have the kind of infrastructure for international expansion that Berthoux might be seeking.
“His biggest challenge is finding a really good site network that has the appropriate infrastructure and that is willing to be acquired, and not many have that. Those that do are asking for a lot of money,” said Lacy. “Synexus has a great concept but a very difficult one to implement.”
But some smaller sites might view Synexus’ ambitious plans as very appealing—as a way to grow with an overseas partner that has deep pockets. One CEO with two sites and plans to open a third in the coming months said the acquisition market is very active.
“In the past 12 months, I’ve had 14 different entities call me about purchasing my company or investing in or partnering with me,” said Terry Stubbs, founder and CEO of ActiveMed Practices & Research, which operates sites in Methuen, Mass., and Newington, N.H., and plans to open a third in Beverly, Mass.
She said the market for sites will continue to prosper as it has in the past two years, with relatively high prices for good sites. Smaller sites, staffed by a physician/PI and a nurse, will disappear in the coming years, she said.
“I want to grow and expand my eight-bed phase I facility to a 30-bed site,” said Stubbs. “I want an equity partner and I don’t want to sit still.”
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