LabCorp Makes $8 Billion+ Proposal to CRO PPD

February 6, 2017
By Alex Keown, BioSpace.com Breaking News Staff

BURLINGTON, N.C. – Laboratory Corporation of America (LabCorp) could make an $8 billion bid in an auction to acquire Wilmington, N.C,-based Pharmaceutical Product Development LLC (PPD) , Reuters reported.

However, there is no guarantee that LabCorp will be successful in its bid for fellow-Tar Heel State company PPD. Reuters reported the auction of PPD is attracting multiple bidders. It is not known when or if PPD accepts any offers, but Reuters indicated a decision would be several weeks away.

If LabCorp is successful in bidding on PPD, this would be the largest deal the company has been involved with. In 2014, the company snapped up Covance Drug Development for $6.1 billion. LabCorp is currently the largest clinical diagnostics company in the U.S. and possibly the world. If LabCorp is successful in its acquisition, PPD’s role as a top 10 CRO would expand the influence of LabCorp. LabCorp has a market capitalization of approximately $14.1 billion.

Privately-held PPD, a contract research organization, has been rumored to be at the center of a planned sale for some time. In December 2015, BioSpace reported, citing inside sources, that the company’s private equity holders, Carlyle Group LP and Hellman & Friedman LLC, had contacted investment banks regarding appointing financial advisers for a potential sale. However, if an auction of the company does not generate the hoped-for revenue, the company could seek to raise funds through an initial public offering. Carlyle and Hellman & Friedman took PPD private in 2011 for $3.9 billion, Reuters reported.

PPD has offices in nearly 50 countries and employs more than 18,500 people. PPD specializes in early-stage drug development and works in a wide-range of therapeutic discovery, including cardiology and urology, Reuters said. In January, the company opened a new clinical research unit in Las Vegas. The 24-bed site will be used to conduct complex, procedurally intensive Phase I and early development clinical research.

Based in Burlington, N.C. LabCorp has offices in about 60 countries and employs approximately 50,000 people. The company specializes in providing routine testing and patient diagnostics. LabCorp also has developed specialty testing in oncology, HIV, genotyping and phenotyping as well as diagnostic genetics, Reuters noted. In January, LabCorp acquired assets of Mount Sinai’s Clinical Outreach Laboratories to provide comprehensive laboratory services to physicians and patients that currently use Mount Sinai’s outreach laboratory.

Over the past year or so, there have been several mergers in the CRO section. In May 2016—IMS Health Holdings, Inc. struck a $9 billion all-stock deal to acquire North Carolina-based Quintiles Transnational Holdings, Inc. In 2015, Quintiles merged with Quest Diagnostics Incorporated , a medical test maker, to form the world’s second-largest global clinical trials laboratory services business.