Clinical-trial operator Icon ICLR -7.77% PLC said it would acquire rival PRA Health Sciences Inc. PRAH 18.73% for $12 billion, creating a powerhouse provider of services to pharmaceutical companies that are farming out more work to contractors.
Dublin-based Icon, which reported $2.8 billion in sales last year, helps pharmaceutical companies run studies testing experimental drugs and vaccines in people, including deploying nurses to people’s homes for patient recruitment and monitoring. The tie-up would create one of the world’s largest contract-research organizations, known as CROs, which test experimental drugs in animals and help run studies of promising late-stage drugs in humans.
In acquiring PRA, Icon would expand into digital and technology capabilities that are playing roles in clinical trials accelerated by the Covid-19 pandemic, such as virtual monitoring of study subjects as people stay at home and avoid public places. Raleigh, N.C.-based PRA’s products include mobile and digital platforms that enable trial subjects to enter medical information on their smartphones, easing the burden of data collection on study managers.
“I think the pandemic has shown everybody that we can do things differently and it works,” Icon Chief Executive Steve Cutler said Wednesday. Dr. Cutler said Icon has about 1,000 employees working on Covid-19 vaccine research for Pfizer Inc. and BioNTech SE.
PRA has been helping drugmakers recruit subjects for trials evaluating Covid-19 drugs and vaccines and helping make Covid-19 testing more available. The pandemic, and the need for reliable and quick testing and other services, has spawned a flurry of new startups and prompted other companies to broaden services.
Dr. Cutler said with access to more patient data, technology and resources, the combined company would be better positioned to recruit patients, including those who suffer from rare diseases, which can require searching far-flung regions of the world. Clinical trials, which can last several years, sometimes need more than two years to be filled, he said.
The acquisition will also expand Icon’s presence in Asia, including China, a growing market for the pharmaceutical industry, Dr. Cutler said.
The cash-stock deal valued PRA at $80 a share, about a 30% premium to PRA’s closing price on Tuesday.
When the deal closes, which is scheduled to happen in the third quarter, PRA shareholders would own about a third of the combined company, with Icon shareholders owning the rest.
Icon said that it would finance the deal with an even split of cash and debt and that the combined company’s revenue would grow in high single digits over the long term. Combining the companies would allow for $150 million of cost cuts, Icon said.
The CRO industry has benefited from increased spending for potentially breakthrough drugs that can command high prices if approved, such as cancer treatments and gene therapies. The past decade has seen consolidation, as well as the emergence of new players, in CROs. Diagnostics companies like Laboratory Corp. of America, for instance, have expanded into drug development. Charles River Laboratories International Inc. last week said it would acquire Cognate BioServices Inc., a cell- and gene-therapy contract manufacturer, for $875 million.
Icon, which has 16,000 employees in 41 countries, said it would keep its corporate headquarters in Dublin.
PRA, which reported $3.2 billion in sales last year, has 19,000 employees. PRA CEO Colin Shannon would join Icon’s board after the deal closes.
—Colin Kellaher contributed to this article.
Write to Jared S. Hopkins at [email protected]
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