Q is for Quintiles: CRO picked good time to return to the public markets

stock market[Update] Contract research organization Quintiles returned to the public markets today, trading on the NYSE under the stock symbol Q. It raised $947 million after it was priced at $40. Although the share price initially rose 9 percent after trading opened, it closed at $42.11, a 5 percent increase in its opening share price.

The offering price values Quintiles at $6.6 billion including debt, according to Bloomberg.

Morningstar Senior Equity Analyst for Biotechnology Lauren Migliore is bullish about how Quintiles will fare in its return to the stock market, according to a report authored by Migliore this week.

“We think the firm’s unparalleled size and exposure outfit it with a narrow economic moat and the strongest competitive advantages in the CRO industry. Drugmakers’ increased use of outsourcing and the emerging strategic partnership model are further bolstering Quintiles’ already-formidable defenses against weaker rivals…”



“We think Quintiles will see 8 percent compound annual revenue growth over the next five years, at the top range of management’s 5 percent to 8 percent forecast. This growth will be driven by both increased outsourcing (we project CRO penetration will improve roughly 5 percentage points in the near term) and market share gains as Quintiles continues to take a greater share of the dollars spent on R&D.”

And Quintiles is a giant among CROs. By Morningstar’s calculations, it is 70 percent larger than the next largest CRO by sales — Covance.

The Burrill Report counted 16 life science IPOs among the 37 that were filed last year. Companies in many sectors, including life science companies, have taken a cautious approach to IPOs in the past couple of years, according to Fenwick. because of the volatility and uncertainty that has hung over the stock market in recent years.

But there seem to be some signs that 2013 could turn things around. In 2010, the BIO industry organization predicted that 2013 would mark a resurgence in the number of life science IPOs filed, comparable to 2007 levels thanks in part to the JOBS Act which loosened the pre-IPO marketing requirements for emerging growth stage companies. BIOtech Now noted that 20 life science companies had filed to go public as of the third quarter of 2012 under the looser rules.

The Wall Street Journal underscores the 2007 feeling. Referencing capital markets research firm Ipreo, it said the Durham, NC, company’s debut is the biggest of 11 US-listed IPOs this week — the most for any week since November 2007.

Quintiles initially went public in 1994 but was taken private in 2003.

No comments