As predicted in our January 2015 CP article, pharmaceutical services and IT M&A and capital market activity in 2015 has been quite strong. This has been due to a number of factors including the continued strong demand from pharma/device sponsors for outsourced services, desire of strategic/operating companies to enhance their growth opportunities via acquisitions, interest from private equity firms in the sector and favorable capital market conditions. Below is a recap of a few notable transactions over the last few months.

Chiltern Acquires Theorem
The combination enhances the global reach of the new Chiltern while adding analytical tools and development capabilities, medical device regulatory services and combination trials. Nick Thornton and Dr. Jim Esinhart will continue as chairman and chief executive officer of Chiltern, respectively, and Dr. John Potthoff will assume a non-executive role as a member of Chiltern’s board of directors. With the combination, Chiltern now has over 3,700 employees working in over 47 countries.

ICON Leverages IBM’s Watson
The goal of the arrangement is to reduce the time and costs of drug development, while also offering patients enhanced quality of care by connecting them to relevant clinical trials. ICON expects to see trial participant identification and enrollment accelerated. As personalized medicine continues to grow, so does the demand to utilize technology for efficiently locating the right trial participants.
At the time of the announcement, ICON’s chief operating officer, Dr. Steve Cutler, said: “Recruiting the required number of patients for clinical trials is a constant challenge for our customers and can represent more than 30% of total study costs. By applying IBM Watson to our clinical trials, we have the potential to revolutionize clinical trial feasibility, patient recruitment and study start-up timelines, which will help our customers take significant time and cost from their development programs. Together with IBM, we are also providing a better and faster way to connect patients with clinical trials that are most relevant to them.”

PAREXEL’s $200 million Share Repurchase Program
This equates to approximately 2.75 million shares at the recent PRXL stock price. At the inception of the accelerated share repurchase (ASR) agreement, PAREXEL announced it will receive approximately 2.3 million shares under the program. 

WuXi Apptec Taken Private
The company entered into a definitive agreement to be taken private by a new entity formed by Ally Bridge Group Capital Partners, Boyu Capital, Temasek Life Sciences Private Limited, Ping An Insurance, Hillhouse Fund II, L.P. and certain existing shareholders and executive officers of the company.

INC Research Secondary Stock Offering
INCR’s private equity shareholders, including investment funds associated with Avista Capital Partners, affiliates of Teachers’ Private Capital—the private investment arm of Ontario Teachers’ Pension Plan Board—and current and former employees of the company, sold 8,000,000 shares of their collective holdings to the public. The company did not receive any proceeds from the sale of the shares by the selling stockholders in the offering.

Quintiles Secondary Stock Offering
Quintiles’ private equity shareholders, including investment funds associated with Bain Capital Investors, TPG Global, 3i Corporation and Temasek Life Sciences Private Limited, sold 7,000,000 shares of their collective holdings to the public. The company did not offer any stock in this transaction and did not receive any proceeds from the sale of the shares.

PPD $1.125 Billion Notes Offering
PPD announced their intention to offer $1.125 billion in aggregate principal amount of senior notes due 2023 in a private offering. The proceeds from this offering will primarily be used to pay down existing debt and to make dividend and/or distribution(s) to shareholders and/or option holders.

Charles River Labs Acquires Celsis International
The acquisition complements CRL’s Endotoxin and Microbial Detection’s (EMD) position as a leading provider of rapid endotoxin testing and bacterial identification for biopharmaceutical manufacturing and creates the most comprehensive solution for rapid quality control testing of biopharmaceutical and consumer products.

Celsis is a leading provider of rapid bacterial detection systems for quality control testing in the biopharmaceutical and consumer products industries. Celsis’s systems are principally used for product-release testing to help ensure the safe manufacture of drugs and consumer products.

The comprehensive EMD and Celsis portfolio is expected to drive increased adoption of EMD’s quality control testing solutions across both sterile and non-sterile applications, as clients seek a single provider for their rapid product-release testing needs.

Quintiles & Quest Diagnostics Launch Q2 Solutions
Q2 combines the global clinical trials laboratories businesses of each JV partner. Ownership of the JV 60/40 Quintiles/Quest. The combined business is expected to generate nearly $600 million in revenue and will be managed by Costa Panagos, CEO of Q2 Solutions.

Conditions are expected to remain favorable for M&A and capital markets activity in the pharmaceutical service and IT sector, therefore, transaction volume should remain high for the remainder of 2015 and into 2016.