There haven’t been many deals targeting contract research organizations (CRO) in 2020, especially compared to previous years, which makes sense. Life science companies are all slowing down clinical trials (COVID-19 vaccine research excluded) to adhere to social distancing guidelines, meaning CRO services are just not in as high demand. For 2020, only 10% of deals in the Other Services sector have targeted a CRO company (14 deals). To put that in context, CROs were targeted in 15% (29 transactions) of deals in the Other Services sector for 2019, according to The 2020 Health Care Services Acquisition Report.
There haven’t been many headline deals this year for the CRO market. Last November, Leonard Green & Partners, L.P acquired WIRB-Copernicus Group (WCG) for $3 billion, but 2020 has not seen anything of that magnitude.
The most recent deal for a CRO was announced just last week. On August 5, Genesis Drug Discovery & Development (GD3), a member of the Genesis Biotechnology Group, acquired California-based Comparative Biosciences Inc. Comparative Biosciences was founded in 1996 to provide expert scientific resources and quality service to all sectors of the biomedical and biopharmaceutical community, with extensive good laboratory practice (GLP) and non-GLP preclinical toxicology, efficacy, pharmacology, pharmacokinetics-pharmacodynamics, histopathology and safety studies on all laboratory species.
The acquisition will allow GD3 to expand its pre-clinical services to GLP, or good laboratory practice, based studies. GD3 is a relatively new member of the M&A market, according to DSO. The company announced its first deal in November 2019, acquiring New England Discovery Partners in Connecticut, a CRO specializing in synthetic and medicinal chemistry.
Much of the activity in 2020 can be attributed to private equity firms or their portfolio companies, accounting for roughly 61% of the deals. In early July, Headlands Research, a portfolio company of KKR (NYSE: KKR), purchased two clinical research centers: the JEM Research Institute, a central nervous system (CNS) research center, and Toronto Memory Program, a community-based clinical trial facility specializing in interventional trials for Alzheimer’s disease and related disorders. Toronto Memory Program has completed over 150 CNS trials since its inception. JEM was founded in 2007 and Toronto Memory in 1996. No terms were disclosed for the transaction.