ReSearch Pharmaceutical Services’ (RPS) plan to acquire a small contract research organization (CRO) in China will expand the company’s capabilities in Asia, but the deal is also part of a larger plan to expand RPS throughout the world by multiple acquisitions.
RPS plans to acquire Paramax International for $1 million in cash and 530,973 shares of RPS common stock. RPS CEO Dan Perlman said the Paramax acquisition, expected to close in May, is the latest step in RPS’ global growth plan to have offices in Western Europe and Asia. RPS acquired three European CROs—Imerem, Infociencia and Therapharm—in December.
“There was a lot of pressure on us last year to globalize…because, while we might be doing all the study management for a sponsor or all the monitoring for a sponsor in the Americas—we have offices throughout Latin America and in Canada as well as the U.S.—they wanted to expand that into Europe, eastern and western, and into Asia,” Perlman said.
Paramax, which is headquartered in Beijing, China, with operations in Shanghai, will serve as RPS’ Asian base of operations. RPS will take over these facilities but will likely move to a bigger space in the coming months, Perlman said. All Paramax employees (approximately 50) will join RPS.
Although the acquisition is not yet final, RPS is moving ahead with plans to expand throughout Asia. Last week, the company incorporated in Korea and plans to staff that office with 13 to 20 people by the end of the month.
“I chose China as where I wanted our hub to be for multiple reasons. I am a tremendous believer that in the next three years, China will more and more be becoming a player in clinical trials. I think they have the right logistics, they have the right population…they have the right market. From a financial point of view, they’re in very strong shape,” Perlman said.
RPS calls itself a “next generation” CRO, meaning it operates as a full-service CRO for small to mid-size sponsors but also offers integrated programs to a dozen large pharma companies. With these programs, RPS works within the sponsor company and handles all the study management, monitoring, medical writing and other tasks using the sponsor’s systems and services. RPS’ unique business model made the search for prospective acquisitions more difficult, Perlman said.
“It took a long time for us to weed out a lot of different companies…There are a lot of people for sale, but there aren’t many people buying, which is good for us, so we went through quite an exhaustive diligence to choose,” Perlman said. “[The company] has to match both from the CRO side but it also has to match for one of these integrated programs.”
As part of the European acquisitions, RPS gained four offices, in Madrid, Barcelona, Nuremberg and Paris, as well as a phase I facility in Normandy. They are in the process of adding six more offices and have begun incorporating in almost every country in Eastern and Western Europe.
RPS has an annual growth rate of 35%, Perlman said, and approximately 2,000 employees and $200 million in annual revenues. Although the acquisitions in China and Europe get the company where they wanted to be in terms of location, Perlman won’t say RPS’ acquisition spree is over.
“If the opportunity to acquire is in alignment with our model, we will acquire in the short term. If we believe we can organically build it…we’ll do it organically…You’ll see more announcements very shortly,” he said.