Dennis Gillings doesn’t give many interviews and today, the day his Quintiles successor was announced, he wasn’t available to talk either.
I’ve had a few occasions to talk with Gillings and our most recent exchange happened after a life sciences conference in North Carolina a few years ago. By chance, we both left the conference at the same time and ran into each other at the venue’s entrance. We exchanged pleasantries and then I asked the Quintiles CEO what he thought about a recently announced move by a competing CRO. He laughed. So I followed up by asking him how Quintiles was doing.
“Oh, we’re dead in the water, I’m afraid,” he deadpanned.
Far from it. The company that Gillings launched in 1982 has grown to become the largest CRO in the industry with annual revenue of more than $3 billion. But there may have been occasions in the early days, when people might have wondered if the fledgling outfit Gillings launched would end up dead in the water.
Gillings was a biostatistics professor at the University of North Carolina at Chapel Hill in 1974 when he signed his first consulting contract to analyze a drug’s performance. That contract led to others and Gillings engaged his students to participate in the analysis. In those days, the small group worked from a small trailer parked on the UNC campus.
By 1982, there was enough work to sustain a company and Quintiles was born, employing many of the UNC biostatistics students who had toiled in the trailer. Gillings continued to lead Quintiles and teach at UNC until 1988, when he determined that the business’ growth would not allow him to continue doing both. Six years later, Gillings successfully took Quintiles public. The company returned to private ownership in a 2003 buyout led by Gillings along with several private equity investors.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Tom Pike, who spent most of his 30-year career working with consulting firm Accenture (NYSE:ACN), will step in as Quintiles new CEO on April 30. Quintiles says Pike’s appointment is part of the CRO’s ongoing succession planning; Gillings had indicated some time ago his intention to change his role in the company. Gillings, 67, believes that this year — Quintiles 30th anniverary — is the right time for that change.
CRO annual revenue tops $20 billion, according to the Association of Clinical Research Organizations. The CRO industry is now comprised of hundreds of pharmaceutical industry service providers of all sizes. But only a handful of the companies that created the industry 30 some years ago continue as standalone companies today. Of those founding executives who built those companies, even fewer remain on the job. Fred Eshelman, who founded PPD in 1985, stepped away from his chief executive role in 2009, staying on as executive chairman. Candace Kendle led CRO Kendle from its founding in 1989. She moved from chief executive to board chair last year, just prior to the company’s acquisition by INC Research. The last of the CRO industry founders still leading a CRO might be Josef von Rickenbach, who founded Parexel (NASDAQ:PRXL) in 1982 and continues as its CEO today.
A changing of the guard is underway in CRO management and the new blood infusing the industry isn’t necessarily coming from pharmaceutical companies or CROs. While Icon’s (NASDAQ:ICLR) CEO Ciaran Murray ascended to the top position after first serving as CFO, Murray’s CRO work was preceded by global financial positions for companies such as Kraft Foods (NYSE:KFT) and Novell. It’s worth noting that Ray Hill, who was appointed PPD’s new CEO last year before the North Carolina CRO was acquired by private equity firms, came from IMS Health, bringing to his new post the perspective of consulting experience on tapping into emerging markets. Hill didn’t last; PPD’s new private equity owners decided not to keep him. But that’s not a statement on where the industry is going. PPD, Parexel, Icon and INC Research are all charting courses to do more global business with a particular focus on emerging markets. Quintiles, which became a global company before many of its competitors, is doing the same.
The company Gillings built from a small university trailer remains the biggest of the pharmaceutical industry services providers, growing organically but also by acquisition. Far from being dead in the water, Quintiles is alive and kicking as the biggest fish in the sea.
Quintiles was founded in 1982 but the clinical research organization actually started doing work well before that. Here are some company highlights:
Beginnings. Dennis Gillings, a University of North Carolina biostatistics professor, signs his first pharmaceutical consulting contract in 1974. The work leads to additional contracts with pharmaceutical companies. Gillings enlists UNC biostatistics students to conduct the analysis with him. They work from a trailer on UNC’s campus.
Founding. As Gillings secures more pharmaceutical consulting work, he decides to start a company. Quintiles is incorporated in North Carolina in 1982.
Initial public offering. As Quintiles grows, the company pursues plans for IPO, completing the stock offering in 1994.
Merger. In 1996, Quintiles merges with Innovex Ltd, making Quintiles the world’s largest contract pharmaceutical services company.
Revenue milestone. In 1998, Quintiles becomes the first CRO to cross the $1 billion annual revenue mark.
Going Private. In 2003, Quintiles becomes a private company again through investments by Gillings and private equity firms.
Acquisitions. Quintiles in November 2011 acquires the late phase and observational research firm Outcome Sciences. No financial terms are disclosed but Quintiles says it is the firm’s largest acquisition in 10 years. Quintiles also acquires VCG commercial services and the bioanalytical lab of Advion BioServices.
New CEO. On April 23, former Accenture executive Tom Pike is announced as Gillings successor. He starts on April 30.
[Photo courtesy of Quintiles]
