Icon acquires clinical trial competitor PRA

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“Powerhouse Pharma Provider” 

Icon PLC is buying its rival clinical trial operator PRA Health Sciences Inc. for $12 billion in cash and stock, creating what Jared S. Hopkins of The Wall Street Journal described as “a powerhouse provider of services to pharmaceutical companies that are farming out more work to contractors.” The combined company would increase the role of technology in clinical trials and create one of the world’s largest contract-research organizations (CROs), to test experimental drugs in animals and perform studies of promising late-stage drugs in humans.

The new entity will commit to strong positions in clinical research, efficient clinical trial execution from Phase I to post-approval, and healthcare data. Both companies said that there was a growing need for decentralized and hybrid trial solutions that include data from mobile and connected health platforms, as well as from a global network of clinical trial sites, home health services, and wearables.

PRA Health Sciences shares jumped almost 18.7 percent on February 24 after the company signed the deal with ICON plc to be acquired, reported Ben Mahaney in Smarter Analyst. According to the terms of the agreement, the provider of outsourced drug and device development and commercialization services will pay $80 in cash and 0.4125 shares of ICON for each share of PRA Health Sciences (PRAH). The price represents a 30 percent premium to PRAH’s closing price on February 23. Shares of ICON dropped 7.8 percent at the close of trading on February 24.

The transaction, which needs shareholders’ approval and some regulatory approvals, should close in the third quarter of 2021. The transaction is not subject to a financing condition. After closure, the deal is expected to raise ICON’s (ICLR) earnings by double digits in the first full year and by more than 20 percent after that. Mahaney projected that combined run-rate synergies of $150 million may be realized annually within four years. When the transaction closes, PRA shareholders will own 34 percent of the combined company.

Headquartered in Dublin, Icon, which had $2.8 billion in sales in 2019, helps pharmaceutical companies run studies to test experimental drugs and vaccines in people, including sending nurses to people’s homes for patient recruitment and monitoring. The global provider of outsourced drug and device development and commercialization services to pharmaceutical, biotechnology, medical device, government agencies, and public health organizations focuses on the strategic development, management, and analysis of programs that support clinical development—from compound selection to Phase I–IV clinical studies. ICON has about 16,000 employees in 93 locations in 41 countries.

By buying PRA, Icon would grow into digital and technology capabilities that are playing roles in clinical trials accelerated by the COVID-19 pandemic, including virtual monitoring of study subjects as people stay at home and avoid public places. PRA, which is headquartered in Raleigh, North Carolina, has products such as mobile and digital platforms that allow trial subjects to put medical information on their smartphones, making it easier for study managers to collect data. It offers outsourced clinical development and data solution services to biopharma. PRA’s global clinical development operations include more than 75 offices across North America, Europe, Asia, Latin America, Africa, Australia, and the Middle East, and about 19,000 employees worldwide. PRA has been involved in about 4,000 clinical trials worldwide since 2000.

Evercore SI estimates that the market for virtual trials will reach $6 billion by 2024. It includes patient-friendly platforms such as smartphone apps for wearable sensors, rather than physical sites. Elizabeth Anderson, Evercore SI healthcare technology and distribution analyst, said that ICON and PRA have primarily attracted different customers in biopharma. As she explained, “Despite their relative sizes, the small amount of customer overlap between the two should help lower the integration risk.”

As Icon Chief Executive Steve Cutler pointed out, “I think the pandemic has shown everybody that we can do things differently and it works.” He said that Icon has about 1,000 employees working on Covid-19 vaccine research for Pfizer Inc. and BioNTech SE .

According to PRA Health Sciences CEO Colin Shannon, “The union of PRA and ICON will create an organization that has the people, data and technology to bring those cures to patients faster and more efficiently than ever before.”

He added, “COVID-19 created a platform for change that we cannot ignore. The pandemic accelerated the adoption of mobile health technologies and healthcare intelligence tools — tools that PRA helped develop —at an unprecedented rate.”

Because of COVID-19, PRA developed a COVID-19 Clinical Study Support Mobile Application that was configured to virtually connect patients worldwide with clinical trial sites and health professionals from any location by way of their mobile devices. In addition, PRA also mobilized its Center for Vaccine Research, which applies data to enhance the design, site selection, and enrollment forecasting of clinical trials. PRA was involved in Phase I to IV clinical studies that analyzed more than 72,000 COVID-19 patients at more than 700 sites around the world.

In 2020 ICON provided clinical trial amenities for BNT162b2, the mRNA-based COVID-19 vaccine that Pfizer and BioNTech have brought to emergency use authorization in the United States and Europe. The company worked with 153 sites in the United States, Europe, South Africa, and Latin America to obtain the recruitment of over 44,000 trial participants during the course of four months. ICON offered site training, document management, and operational support for patient Informed Consent Form review, coordinated eConsent in most countries, and helped with clinical supply management services. ICON has provided clinical trial services to Pfizer for 30 years. In 2011 the companies established a strategic relationship in 2011, in which ICON provided Pfizer with global expertise in planning, executing, managing, and conducting clinical trials.

However, COVID-19 decreased clinical trial activity for both companies. While changes in clinical trial procedures have helped business to bounce back, revenues were not what had been anticipated in 2020.

Still, the leaders of the two companies are justifiably optimistic. According to Cutler, “We will be the leading provider of decentralized and hybrid trial solutions through the integration of our data capabilities, health platforms, and Accellacare site network. With broader and deeper operational scale combined with innovative technology and real-world data solutions, we will enable all customers to reduce their development time and cost.”

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