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inVentiv Health buys i3 divisions, Campbell Alliance, allowing it to compete with CRO industry’s big players

Monday, January 31, 2011

Ingenix, a UnitedHealth Group subsidiary that provides health care information to the managed care and drug development sectors, is selling off its clinical trial management and contract research services. Those holdings include i3 Research, i3 Statprobe and i3 Pharma Resourcing. 

The buyer is inVentiv Health, a Somerset, N.J., company that provides staffing, sales and communications to pharmaceutical companies.

Terms were not disclosed but the companies say the businesses changing hands generate about $400 million in annual gross revenue. Each company will keep its i3 brand name. Glenn Bilawsky will remain CEO of i3. The deal is expected to close within the first half of the year.

The day after announcing the i3 deal, inVentiv said it will also be acquiring Campbell Alliance, a 13-year-old, Raleigh, N.C.-based management consulting firm in the clinical research space. 

Also announced: Paul Meister, executive chairman of inVentiv, has become CEO. Meister is founder and CEO of Liberty Lane Partners, a private equity company that’s part of the investment group that acquired inVentiv in August 2010. Blane Walter, formerly CEO of inVentiv, will remain on the board of directors as vice chairman. 

The acquisitions round out inVentiv’s offerings and catapult it into a top echelon, said Neal McCarthy, managing director of Fairmount Partners, an investment banking firm that focuses on the CRO space. “In one fell swoop, it went from being a $200 million company that was mostly staffing to a $600 million company that’s a full-service CRO,” he said. “This opportunity was perfect for inVentiv.”

Indeed, the new purchases put inVentiv in the same category with the CRO industry’s big players such as PPD, Parexel and ICON, McCarthy said. Operating under the i3 brand, the combined organization will have operations across North America, Latin America, Europe, the Middle East, Asia and Asia Pacific.

Executives from inVentive did not make themselves available for comment. 

i3 Research is a CRO. i3 Statprobe focuses on data management, statistics and medical writing, while i3 Pharma Resourcing handles staffing. Together, they have about 2,800 employees. Why did Ingenix choose to sell them now?

“Over the last several years, under the i3 umbrella, we had two different platforms, one of traditional phase II and III clinical trial support, the other late-phase commercialization—more information, analytics, measurement and evaluation-focused,” explained Karin Olson, vice president of corporate communications for Ingenix. “With all the industry consolidation, sponsor companies wanting support need a robust, global presence. Knowing that that takes continued investment, we thought it was time. The pieces that will stay with Ingenix really better align with our core competencies.”

The parts of i3 that will remain under Ingenix’s purview are i3 Innovus, which offers health economics and outcomes research, i3 Pharma Informatics, which focuses on data analysis and consulting as well as informatics tools, and i3 Drug Safety. Together, they have about 600 employees, Olson said. Those divisions will drop the i3 name and will instead be organized under Ingenix’s new life sciences division, led by Lee Valenta, who has been COO of Ingenix for five years.

Campbell Alliance will operate independently as the consulting segment of inVentiv. John and Ann Campbell, CEO and president, respectively, will continue to lead the organization, which will operate under the Campbell Alliance brand. inVentiv Advance Insights, inVentiv’s existing consulting business, will be folded into Campbell Alliance.

“We are thrilled to welcome both Campbell Alliance and i3 to inVentive Health,” said Meister. “As we pursue our strategy of becoming the world’s leading provider of best-in-class outsourced solutions to healthcare clients, Campbell Alliance and i3 will serve as critical segments of our business, expanding our ability to meet client needs and driving our future growth.”

The remaining components of inVentiv Health—Communications, Selling Solutions, Selling Accelerators and Patient Outcomes—will align to operate as the new commercial segment under the name inVentiv Health. As the largest pillar with approximately $900 million in annual revenue, the commercial segment will provide multi-channel marketing and sales solutions to the biopharmaceutical and healthcare industry.

Said John Kreger, a financial analyst with William Blair who has been scrutinizing the clinical research outsourcing space for almost 20 years, explained Ingenix’ decision to hold on to parts of i3. 

“Keeping the phase IV post-marketing part of the i3 asset just make sense,” he said. “They want to keep the part of the business that most closely aligns with the health plan, where you could do outcomes measurements and pharmacoeconomic studies of any number of drugs or procedures by tapping into their membership base. That’s why a health plan would want to own a company like this. They’re moving out of the plain vanilla CRO business and keeping the part of the business that is most strategic to them.”

—Suz Redfearn

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