Cinven announced this morning it had reached an agreement to buy Medpace for $915m (€665m) from CCMP Capital Advisors who acquired the Ohio, US-headquartered contract research organisation (CRO) in 2011.
The CRO industry has seen consolidation in the last few years, with a number of midsize firms combining - PRA and RPS last year, for example - in order to offer a greater depth of services and a greater geographical presence, and such an environment has left an attractive space, according to Cinven spokesperson Vanessa Maydon.
“Cinven is very sector-driven in its investment approach and our healthcare team identified the CRO sector as highly attractive in terms of growth prospects,” she told Outsourcing-Pharma.com
“Medpace is particularly attractive given its focus on the smaller to mid-market biotech, pharma and medical device companies, where consolidation at the larger end of the CRO market has created a gap and where recent funding strengthens the short-medium prospects for the need to continue outsourcing their clinical trials.”
Medpace’s growing presence in Europe was also cited as a reason for investment. According to Cinven, Medpace has over 1,500 employees with approximately 40% of clinical operations employees in Europe, and the private equity firm sees a number of growth opportunities in both Europe and Asia, according to Maydon.
“Cinven as a Europe-based private equity firm has significant track record of successfully growing businesses in Europe,” she said, as well as “a portfolio team in Asia who focus on helping our Europe-based businesses expand into the region.”
Furthermore, Cinven has experience in growing healthcare businesses in Europe and Asia, Maydon added, buying an in-vitro diagnostics business called Phadia which it later sold to Thermo Fisher for $3.5bn in 2011.
European Private Equity
Cinven’s move into the CRO industry comes as the latest in a string of private equity investments over the last few years. inVentiv, INC Research, PRA, Theorem and PPD have all been bought by private equity firms, though Cinven is one of the few to be European based.
“Medpace has generated significant growth recently in Europe, so it made huge sense for us to partner with a private equity sponsor with a strong European presence and the ability to help us expand our operations in Asia,” said Medpace CEO Dr. August Troendle.
Troendle, who is also the founder of Medpace, will remain at the helm of the company along with other senior management once the deal - being brokered by Barclays and Wells Fargo Securities – is completed, subject to customary regulatory approvals. Jefferies was the financial advisor to Medpace, and CCMP Capital Advisors.