Quintiles has filed for an initial public offering (IPO) of its common stock, putting a lid on the ownership rumours that have swirled around the company since founder Dennis Gillings stepped down as chairman and chief executive officer last April.
Billing itself as “the world’s largest provider of biopharmaceutical development services and commercial outsourcing services”, Quintiles aims to raise up to US$600 million in the IPO.
The proposed maximum offering price is a registration formality, though, and the US-based company has yet to reveal how many shares it will offer or the associated price range. Some analysts have suggested an IPO could be worth more than US$3 billion.
Quintiles expects to use the net proceeds from the initial public offering, set out in a Form S-1 Registration Statement filed with the US Securities and Exchange Commission, to repay a portion of its existing long-term debt and for general corporate purposes.
Previous IPO
The company has been here before, albeit on a considerably more modest scale. Co-founded in 1982 by Gillings, a biostatistics professor at the University of North Carolina, Quintiles completed its first IPO in 1994, by which time it was generating revenues of more than US$90 million.
In September 2003 a group of investors including Gillings took Quintiles private, and in January 2008 a shareholder reorganisation brought private equity interests on board –namely Bain Capital Partners, TPG Global, 3i and Temasek Holdings.
The Registration Statement records Gillings and his affiliates as now owning 23.7% of Quintiles, with other leading shareholders listed as Bain Capital and related funds (22.9%), TPG Funds (22.9%), affiliates of 3i (15.1%) and Temasek Life Sciences Private Limited (9.7%).
Broad offering
These days the Quintiles brand embraces a broad range of product development and commercialisation services, with more than 27,000 employees pursuing these businesses in some 100 countries worldwide.
Service revenues in 2012 were US$3.7 billion, generating net income of US$177.5 million and adjusted earnings before interest, taxes, depreciation, and amortisation (non-GAAP basis) of US$543.7 million.
Net new business was worth US$4.5 billion in 2012 and Quintiles ended the year with $8.7 billion in backlog.
The company’s Product Development segment is described as the world’s largest contract research organisation, as ranked by reported service revenues in 2011.
It focuses mainly on Phase II-IV clinical trials and associated laboratory and analytical activities, the Registration Statement notes. Product Development accounted for around 74% of total service revenues in 2012.
The remaining 26% came from Integrated Healthcare Services, which includes commercial offerings such as contract pharmaceutical sales forces, as well as catering for the broader healthcare sector – for example, through outcomes-based and payer/provider services.
According to the Registration Statement, Quintiles has provided services in relation to the development or commercialisation of the 50 best-selling biopharmaceutical products and the 20 best-selling biologic products, as measured by reported sales in 2011.
Of the new molecular entities and new biologic applications approved between 2004 and 2011, the company helped to develop or commercialise 85% of the central nervous system drugs, 76% of the oncology drugs and 72% of the cardiovascular drugs, it adds.
Healthy growth
Quintiles is looking to capitalise on continuing healthy growth in outsourcing across the market segments it serves.
It estimates clinical development spending outsourced to contract research organisations in Phases I-IV at around US$16 billion in 2011, a figure that should expand by 5%-8% per year to reach some US$22 billion by 2015.
Outsourcing penetration in these segments was 33% in 2011, the company says.
The diversity of markets served makes it harder to pin a figure on Integrated Health Services, but Quintiles believes current outsourcing penetration of an estimated US$88 addressable market is not more than 15%.
“As business models continue to evolve in the healthcare sector, we believe that the growth rate for outsourcing across the Integrated Healthcare Services markets will be similar to the growth in clinical development,” it states.
