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CRO industry consolidation continues as Amulet acquires SynteractHCR

Monday, June 6, 2016

The latest deal in a steady string of mergers and acquisitions in the CRO industry closed at the end of last month, when Amulet Capital Partners bought out SynteractHCR.

SynteractHCR ranks as a top 20 global, full-service CRO focused on phase I to IV clinical trials for emerging to mid-sized biopharma clients in the U.S., Europe and Asia. Based in San Diego, the organization serves 700,000-plus patients, employs some 800 staffers in 21 countries and has contributed to more than 230 product approvals.

“The importance of CROs to the pharmaceutical and biotech industries has grown significantly in the last decade, and the current market dynamic is very favorable for middle-market CROs, particularly those focused on small and mid-sized biopharma clients,” said Ramsey Frank, partner and co-founder of Amulet—a middle-market private equity investment firm based in Greenwich, Connecticut. “SynteractHCR is a leading CRO with global scale and solid earnings momentum, well-positioned to take advantage of the strong long-term growth prospects in the sector.”   

“SynteractHCR’s strategic intitiaves revolve around continuing to invest organically in the business,” said Wendel Barr, CEO of SynteractHCR. “The company has been very successful dealing with mid-sized biopharma, and our focus will be to increase scope and scale, add more therapeutic depth and increase density in more countries.”

The acquisition, the terms of which were not disclosed, was not surprising given SynteractHCR’s steady growth and the consolidation taking place in the CRO industry recently, according to David K. Blume, co-founder and managing director of Edgemont Capital Partners. “I would expect that the company had been approached numerous times over the past few years about an acquisition,” he said.

Synteract was founded in 1995. In 2008, major interest in the company was acquired by Gryphon Investors, a middle-market private equity firm. “When Gryphon acquired Synteract, it was a niche CRO based in California,” said Barr.

With Gryphon’s support, Synteract began expanding, and by 2011 the company had earned a spot on Inc. magazine’s Inc. 5,000 list of America’s fastest-growing private U.S. companies. When the company acquired Harrison Clinical Research in 2013 to become SynteractHCR, it grew from having “little presence internationally to being in the European market in a big way,” said Barr. By 2014, SynteractHCR was conducting clinical trials in more than 60 countries.

Amulet’s acquisition of SynteractHCR reflects the changing landscape of the CRO industry, with M&As occurring at a fairly regular clip. Earlier in the month, Quintiles Transnational and IMS Health announced an all-stock merger of equals—a transaction that ranks as the largest CRO merger in history. The combined equity market capitalization of the two companies is more than $17.6 billion, and the enterprise value is more than $23 billion. The landmark deal was preceded by Laboratory Corporation of America’s (LabCorp) buyout of Covance in February 2015 for $6.2 billion.

Rumors that more deals are in the works have also surfaced in recent months. Speculation that LabCorp is in preliminary talks to buy INC Research has circulated throughout the industry for weeks. Based in Raleigh, North Carolina, INC Research is a pharmaceutical research organization valued at $2.75 billion.

Last week, a report appearing in Reuters suggested that Bioclinica, a Newtown, Pennsylvania-based company owned by JLL Partners, is considering a sale that could value it at as much as $1.3 billion, including debt. Mary Karpa, corporate public relations spokesperson for the company, declined to comment, noting that the Reuters story is “speculative.”

As for the newly acquired SynteractHCR, going forward, the company “will serve as a platform in the industry as we seek to invest in or acquire complementary businesses that will expand the company’s geographic footprint and areas of therapeutic expertise,” said Frank.

“New funding will allow us to enhance our full-service capabilities, hire even more international clinical development experts to support global trials, and increase our ability to help our clients successfully navigate the complex drug development process,” echoed Barr.

“[The acquisition] leaves a couple of notable players remaining, while large players continue to control the majority of the market,” said Blume. “Further consolidation opens substantial market opportunity for smaller and specialty CROs. We will continue to see accelerating consolidation across the outsourced pharmaceutical spectrum, as well as larger CROs acquiring ancillary services to support a broad range of clinical trials.” 

 

This article was reprinted from Volume 20, Issue 22, of CWWeekly, a leading clinical research industry newsletter providing expanded analysis on breaking news, study leads, trial results and more. Subscribe »

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