Parexel is being sold for $8.5 billion by Pamplona Capital to Swedish private equity firm EQT and the private equity business of Goldman Sachs Asset Management.
The sale, announced Friday, would make Parexel the third contract research organization in five months to announce plans to change hands, reflecting ongoing consolidation in the sector following revenue declines and trial site shutdowns last year due to the COVID-19 pandemic, followed in recent months by a rebound of business as clinical studies delayed by the virus resumed.
In February, ICON agreed to acquire PRA Health Sciences for approximately $12 billion in cash and stock, with those companies expected to close their transaction in the third quarter. And two months later in April, Thermo Fisher Scientific agreed to acquire PPD for $17.4 billion, in a deal expected to be completed by the end of 2021.
But as GEN also reported in April, COVID-19 had a positive effect on CROs by enabling wider use of innovations that began to win approval prior to 2020, such as decentralized clinical trials and use of new technologies allowing for virtual and hybrid trials, thus meeting the growing need for flexibility in clinical research.
Another change wrought by COVID-19: “Biopharma sponsors are actively looking to be more inclusive in their target patient populations to enhance enrollment from minority and classically underserved populations,” Jim Anthony, senior vice president, global head, Parexel Biotech, told GEN.
Also driving CRO growth in recent months, Anthony said: Customers increasingly seek globally integrated solutions for both large and small trials—such as by bundling regulatory, clinical, and safety services.
Other services increasingly being sought by biopharma customers include the collection of real-world evidence, decentralized clinical trials, biostatistics, and data management, Parexel CEO Jamie Macdonald said in a statement—not surprising given the increasingly large size of later-stage trials.
“Advancing and innovating”
“With the market for outsourced clinical research services anticipated to grow at a conservative CAGR [compound annual growth rate] of 8 to 9 percent, our focus remains on advancing and innovating Parexel to meet our customers’ needs across the evolving clinical development landscape,” Macdonald stated. “EQT and Goldman Sachs support this vision and are committed to investing in Parexel and our people to capitalize on this exciting market opportunity and make a difference for patients.”
Macdonald will remain Parexel’s CEO following completion of the deal. Before heading Parexel, Macdonald had been a longtime senior advisor to EQT.
Founded in 1982, Parexel is co-headquartered in Newton, MA, and Durham, NC, with 75 locations in 41 countries on six continents—including additional U.S. locations in Baltimore; Billerica, MA; Glendale, CA; Hackensack, NJ; Kennesaw, GA; and Quakertown, PA. Parexel employs more than 17,000 people and conducts clinical trials in more than 95 different countries.
Swedish-based EQT has €67 billion ($79.5 billion) in assets under management across 26 active funds. Goldman Sachs Asset Management is the investment arm of Goldman Sachs Group, and oversees more than $2 trillion in assets worldwide as of March 31.
EQT/Goldman Sachs’ acquisition of Parexel is subject to receipt of applicable regulatory approvals and other customary conditions.
“We’re very proud of Parexel’s progress over the past four years and the important work they do in helping bring exciting new therapies to patients in need. In particular, they successfully adapted the business to work in the midst of a global pandemic, and supported the development of therapies to combat the COVID-19 pandemic itself,” added John Halsted, managing partner, Pamplona Capital Management. “We wish them every success in their next phase of growth.”