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Slideshow: More LBO Targets In The CRO Market

The Carlyle Group and Hellman & Friedman’s $3.9 billion agreement to buy Pharmaceutical Product Development Inc. marks the latest example of buyout shops buying companies that run clinical trials for pharma and biotech companies.

These so-called contract research organizations, or CROs, are expected to expand and consolidate, making it highly likely we could see more LBOs. Click through below to see a selection of other noteworthy CROs, presented alphabetically, that could look attractive to sponsors. These include public companies that, like PPD, might find it easier to navigate the market’s consolidation under private ownership; public companies with recent changes at the CEO level; and private equity-owned companies, including one that’s been in its owner’s portfolio for almost four years now.

Sources for the slideshow below are Yahoo, Capital IQ, company web sites, Morningstar.

Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters.


[slide title=”Charles River Laboratories Inc.”]

Status: Public (CRL)

Snapshot: Founded in 1947, the Wilmington, Mass.-based company provides research models and preclinical and clinical support services. Serves pharma, biotech, government, and academic organizations.

Market Cap: $1.41B

Oct. 3 closing share price: $28.03

Notes: Employs 7,500 in 60 facilities in 16 countries. Revenue of $1.13 billion in 2010. Morningstar believes its shares are undervalued and expects earnings to increase in the coming quarters. Recently won a $34 million, five-year grant from the National Institutes of Health (“sticky” in PE parlance?) in the second phase of something called the “Knockout Mouse Project.”

[slide title=”ICON plc”]

Status: Public (ICLR)

Snapshot: Dublin, Ireland-based CRO, founded in 1990, serving pharmas, biotechs and medical device companies there and in the rest of Europe as well as in the U.S.

Market Cap: $960.93M

Oct. 3 closing share price: $16.01

Notes: Announced earlier this month that CEO Peter Gray would step down after 14 years with the company. Pfizer recently named it one of its two primary CRO providers. Morningstar believes earnings will improve in coming quarters and says shares in it and Charles River Labs trade “at the steepest discount to our estimate of their intrinsic value.”

[slide title=”INC Research LLC”]

Status: Private

Snapshot: “Therapeutically focused” CRO, based in Raleigh, N.C., serving pharma and biotech companies worldwide. Founded in 1985, it now also has offices in Africa, Asia, Australia & New Zealand, Europe and Latin America.

Notes: In 2010, Avista Capital Partners teamed up with Teachers’ Private Capital to buy INC Research Inc., a company in which Carlyle has also invested via one of its mezzanine funds.

[slide title=”inVentiv Health Inc.”]

Status: Private

Snapshot: The Somerset, N.J.-based company operates in four segments: clinical, communications, commercial and patient outcomes. Founded in 1997, it serves the pharma, life sciences and health care industries in the U.S., U.K. and France.

Notes: Thomas H. Lee bought the company last year for $1.1 billion. Since then, the company has made several acquisitions, including of two companies owned by other PE firms: It bought PharmaNet Development Group Inc. for $600 million from JLL Partners and Campbell Alliance Group Inc. from Baird Capital Partners.

[slide title=”PAREXEL International Corp.”]

Status: Public (PRXL)

Snapshot: The Waltham, Mass.-based company, founded in 1983, provides clinical research, medical communications, consulting and other services for the pharma, biotech and medical device industries worldwide.

Market Cap: $1.10B

Oct. 3 closing share price: $18.32

Notes: Pfizer recently named it along with ICON plc one of its two primary CRO providers. Morningstar says the firm is seeing an uptick in activity from clients in the emerging biotech market, and that profitability will improve in fiscal 2012.

[slide title=”PRA International Inc.”]

Status: Private

Snapshot: This Raleigh, N.C.-based CRO, founded in 1976, runs clinical trial services across all phases of pharma and biotech drug development in more than 80 countries.

Notes: Genstar Capital, which bought it in 2007 for $700 million, must be thinking about an exit of some sort by now. The company made at least one acquisition under Genstar. It has seven offices in the U.S., three in Latin America, 24 in Europe, one in Israel, seven in Asia, and one in Africa.