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Icon: FY13 bolstered by M&A strategy, bolt-on acqusitions to continue

By Dan Stanton+

24-Feb-2014
Last updated on 24-Feb-2014 at 12:47 GMT

Icon says it intends to continue its M&A strategy focusing on capabilities, geographies and technologies as it reports a robust 2013.

For the full year 2013, Icon’s revenue grew 20% to $1.34bn (€970m). Operating income before restructuring and other items was $130.2m compared to $73.7m last year - an increase of 77%. Operating margin was 9.7% of revenue compared with 6.6% of revenue in 2012

One factor CEO Ciaran Murray attributed to the strong performance was Icon’s procurement policy which since 2008 has seen the firm invest around $300m on eleven acquisitions.

He told stakeholders during a conference call to discuss results last week the benefit of those investments was paying off but due to the changing nature of the CRO market the firm was looking for continuous bolt-on acquisitions.

“We've identified a number of areas where we still need to build up our capability,” Murray said (according to the call transcript, courtesy of Seeking Alpha ), whilst the firm also looks to bolster “certain specific capabilities and skills as customers descale in areas of medical and scientific capability.”

There is continued opportunity in the CRO market, he told stakeholder, “as the biopharma industry continues to outsource more, look for more productivity in its R&D offering, [and] as it develops more partnerships and partnerships of a more strategic nature.”

He continued: “In order to play in that market, we took the decision a number of years ago that we had to invest in having the scale and the range of services and the technology and innovation that will help our customers do that.”

Last year Icon bought the clinical trials service business of Cross County Healthcare , including Akos and Clinforce, and in 2012 the firm added Beijing-based clinical trials firm BeijingWits , whilst purchase of PriceSpective and late-phase firm Oxford have also boosted the company’s capabilities.  

As for future deals, Murray told investors that though they will not be large or transformational “they'll be meatier, but they'll be targeted bolt-on style acquisitions - they won't be large or transformational.

“We very much work on the structure of looking to add targeted capabilities and to manage integration risk,” he continued, adding he expected two or three investments to be targeted over the next year.

Geography and Technology

According to Icon’s balance sheet, net cash stood at $321m at the end of December 2013, considerably higher than the $190m at the end of 2012.

As well as bolt-on capabilities, Icon is looking to geographic and regional capabilities in order to keep up with market movements. “A few years ago, it was Eastern Europe,” Murray said.  We invested there mostly organically.”

“In Asia, we did a combination of organic and M&A, and we continue to look in Asia and in another developing new regions at what we need.”

But the area that is constantly changing, Murray said, was technology and the firm has “an agenda there to drive innovation and the deployment of technology,” in order to speed up and improve the quality of development. “So wherever technology takes us in the big data agenda in that field, we'll be looking in that sector,” he said.

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