CRO Parexel changes hands again in private equity, this time for $ 8.5 billion
A pair of private equity firms are to acquire contract research organization (CRO) Parexel for $ 8.5 billion, the latest in a series of deals involving companies in the life sciences sector.
EQT Private Equity and the private equity businesses of Goldman Sachs Asset Management announced the acquisition agreement on Friday. The deal comes four years after Pamplona Capital Management bought Parexel for around $ 5.5 billion, which deprived the then-listed CRO.
Parexel, which has two headquarters in Durham, NC and Newton, Massachusetts, is a supplier to pharmaceutical and biotechnology companies, conducting clinical trials and providing other services that support the testing of investigational drugs. and medical devices, regulatory filings for these products, and their marketing.
While the CRO industry has grown steadily, the industry stagnated in the past year as the pandemic halted many clinical trials. In their announcement of the acquisition of Parexel, EQT and Goldman cited Parexel’s role in moving the industry towards decentralized clinical trials, which use various technologies to perform remote studies. The companies also noted Parexel’s role in improving the diversity of clinical trials, as CROs aim to ensure that these studies better reflect the patient populations that will be served by a drug or device.
“We believe this investment will accelerate Parexel’s growth as it builds on the company’s global footprint, strong operational capabilities and extensive healthcare network,” said Eric Liu, partner and co-leader global healthcare provider at EQT in a statement.
The acquisition of Parexel is not a total surprise. Bloomberg reported in April that Pamplona was exploring a transaction for its CRO asset, either an IPO or a sale to another company. Anonymous Bloomberg sources said Parexel generates around $ 450 million in annual sales. Among the top 10 CROs, this number puts the company in the middle of the pack.
The Bloomberg report came a week after Thermo Fisher Scientific announced it would pay $ 21 billion to acquire PPD, a publicly traded CRO that reported sales of $ 4.7 billion in 2020. This The deal followed the announcement in February that two publicly traded CROs of comparable size, ICON and PRA Health Sciences, would merge into a $ 12 billion deal and operate under the ICON name and management team. This operation closed Thursday.
Parexel was founded in 1982 and is headed by Jamie McDonald, who prior to his CRO role was senior advisor to EQT. Parexel’s workforce is around 17,000 people. It conducts clinical trials in more than 95 countries.
EQT, which claims to have € 67 billion in assets under management in 26 funds, is an active investor in life sciences and health. Other investments in the healthcare sector include Aldevron, a supplier of DNA plasmids used in cell and gene therapy; Recipharm, a contract development and manufacturing organization; and MHC Asia, a health benefits administrator operating in South East Asia. EQT made its Parexel investment from its EQT IX fund. The firm said that with the Parexel transaction, the fund will be invested between 55% and 60%.
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