What are biopharma companies hiring CROs for these days? PPD spells it out in bid for $100M IPO
More than eight years after PPD was taken private in a $3.9 billion deal, the 35-years-old contract research organization is bracing for the public market again with a $100 million ask.
Having served all of the top 50 biopharma companies in the world by R&D spending and over 300 biotech fledglings, PPD’s filings highlighted the entrenched role CROs play in an industry chasing an ever dwindling return on investment by pushing for faster timelines and tackling payer resistance to pricey therapies.
PPD highlighted five key trends that it believes will drive higher demand for its services:
- Growth in R&D spending: Between 2008 to 2018, R&D budgets rose around 3.3% annually, PPD reckoned;
- Increased levels of outsourcing: “Outsourcing penetration as a percentage of total development spending by biopharmaceutical companies increased from approximately 36% in 2007 to approximately 49% in 2018”;
- Increased complexity in clinical development: New therapeutic modalities, more targeted drug development and new regulatory requirements have made clinical trials harder to design and recruit — highlighting the need for experts;
- Biotechnology sector growth: With over $150 billion of capital raised for biotech companies in the last three years, there’s plenty of fuel for new players to carry on their R&D projects;
- Increasing importance to prove value of new therapies: Real-world evidence is becoming more central to every drug program.
It is of course not the only player capitalizing on this demand. On the clinical development side, which accounts for roughly 80% of its revenue, it listed IQVIA, ICON, Parexel, PRA Health Sciences, LabCorp (Covance business), Syneos Health and MedPace as its major competitors. As for laboratory services, LabCorp, Syneos, Q2 Solutions, ICON, Eurofins Scientific, WuXi AppTec, BioAgilytix and SGS were cited as chief rivals.
Unlike the drug developers PPD serves, its IPO is not designed to fund any expansion in services or capabilities — its revenue, which neared $3 billion by September of 2019, got it covered — but to redeem bonds issued as part of a recapitalization engineered by its biggest private equity backers in 2017.
Hellman & Friedman and the Carlyle Group, the two players responsible for taking PPD off the Nasdaq in 2011, remain the largest stockholders. The former holds the lion’s share at 56.7%, while the latter kept 23.8%. After jumping on board in the 2017 recapitalization, Blue Spectrum and GIC — investing on behalf of Singapore and Abu Dhabi, respectively — each claimed 9.2% of the stock, to be back on the Nasdaq as $PPD
David Simmons, the Pfizer vet who took PPD’s helm in 2012, is in for 1.1%. His compensation package for 2019 totaled $6.2 million, double that of 2018, mostly thanks to option awards. Fellow Pfizer alum and CFO Christopher Scully got $1.2 million while COO William Sharbaugh received $1.7 million.