PRA assessing 'underperforming' JV in light of WuXi going private

04-Nov-2015 - Last updated on 30-Nov-2023 at 15:02 GMT

PRA and WuXi teamed up in December 2012 but the JV is being reassessed, PRA said yesterday

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Three years on, a joint venture with WuXi Pharmatech is underperforming according to PRA management and could be renegotiated when WuXi goes private.

In December 2012, PRA Health Sciences entered into a venture with WuXi forming an independent jointly-owned China-based Phase I-IV clinical trial firm. But speaking yesterday to discuss third quarter 2015 results, PRA said it is assessing the future of the partnership.

“The WuXi JV… is not performing as I had planned,” CFO Linda Baddour told stakeholders. “There's going to be some changes coming with that, and looking forward we are looking at the capital structure to see if there is something we want to change,” she added, though for now the firm has not adjusted its guidance.

WuXi announced in August it intends to go private through a $3.3bn offer from a group of investors, shareholders and executives, and Baddour said PRA is in talks with the fellow contract research organisation (CRO) about the current set-up.

“[With] WuXi going private we're having discussions, and obviously we’ve got great relationship with WuXi and we want to maintain a good friendly partnership. But we might have to make an adjustment to the JV and we are having discussions just now and probably within the next couple of quarters we’ll have that situation resolved.”

Both CROs made a $3m contribution to the WuXiPRA JV earlier this year, but in what Citi Analyst Garen Sarafian noted is a shift its strategy, PRA contributed $20m to a new joint venture with Kohlberg Kravis Roberts (KKR). According to an SEC filing, the KKR JV was setup “to enhance the strategic objectives of the Company.”

For the quarter, PRA reported service revenues of $345m, up around 8% on the same period 2014. The firm won $431m of new business, representing a book-to-bill ratio of 1.25 and contributing to a backlog of $2.3bn.

Going Dutch

In related news, the CRO opened a 33,000 sq ft laboratory in Assen, the Netherlands, last week, offering enhanced bioanalytical services to its pharma customers.

“The new facility is a testament to PRA’s commitment to excellence and our passion to advance clinical development,” said Peter Ketelaar, PRA Vice President of Global Bioanalytical Laboratory Services.

The GLP-compliant site includes investments in small and large molecule equipment, and is 25% larger than the firm’s previous lab space.

“Our technology investments and innovative services operations are what set PRA apart in the industry,” said PRA CEO Colin Shannon. “We take enormous pride in the expertise we bring to the table that enables us to excel at clinical research and deliver quality results for our clients and patients.”