Quintiles files to go public again

dranii@newsobserver.comFebruary 15, 2013 

  • About the company

    Headquarters: Durham

    Executive chairman: Dennis Gillings

    CEO: Tom Pike

    2012 revenue: $3.7 billion

    2012 net income: $177.5 million

    Employees: More than 27,000 worldwide, including more than 2,000 in the Triangle.

    Business: Helps pharmaceutical and biotechnology companies test experimental drugs, and assists those companies with selling and marketing medicines once they win regulatory approval.

Quintiles, a homegrown company that pioneered an industry now vital to the Triangle’s economy, hopes to raise $600 million from investors through an initial public offering of common stock.

The Durham company ended months of speculation Friday when it filed IPO plans with the Securities and Exchange Commission. It would be Quintiles’ second stint as a public company – it went public in 1994 and remained a publicly traded company for nearly a decade before it went private in a leveraged buyout in 2003.

“It’s a good thing for (the Triangle) having companies of this size ... becoming more visible and hopefully continuing to grow,” said Don Reynolds, a securities lawyer for Raleigh law firm Wyrick Robbins Yates & Ponton. “It’s going to put the area more in the national spotlight and it’s drawing a whole bunch of capital here, which is a very good thing.”

Friday’s filing shows that the world’s largest pharmaceutical services company, which has been parsimonious in disclosing details about its business, has been prospering in recent years as pharmaceutical and biotechnology companies increasingly have outsourced work to save costs.

The performance of the company, which increased revenues by 12.1 percent last year to $3.7 billion, should hold the company in good stead as it seeks to go public.

Although IPOs always are subject to the vagaries of market conditions, Reynolds said he couldn’t imagine anything preventing Quintiles from launching a successful IPO.

“A big established company that is also growing is going to be able to get a deal done in most market conditions,” he said.

Quintiles is best known as a contract research organization, or CRO, that helps pharmaceutical and biotechnology companies test experimental drugs. In addition to its CRO business, which accounts for nearly three-quarters of its revenue, it also assists those companies with selling and marketing medicines once they win regulatory approval.

“Quintiles is the market leader. It has a very strong brand,” said venture capitalist Clay Thorp of Durham’s Hatteras Venture Partners. “They have a very strong customer base.”

Quintiles was founded in 1982 by Dennis Gillings, who at the time was a biostatistics professor at UNC-Chapel Hill. Gillings stepped down as CEO last year but remains executive chairman. He also is the firm’s largest shareholder with a 23.7 percent ownership stake.

Quintiles spokesman Phil Bridges, citing “the quiet period” that envelops companies seeking to go public, said he couldn’t comment on the deal. The company is one of the Triangle’s largest employers, with more than 2,000 workers here.

Although Quintiles has been doing well in an expanding market, the company disclosed in its filing that it has been implementing “periodic restructurings” to cut costs in the face of a competitive landscape that has put pressure on prices.

Quintiles was publicly traded from 1994 until 2003 when Gillings, who was frustrated with running a publicly traded company, engineered a $1.7 billion leveraged buyout.

Analysts have long speculated that Gillings was the biggest impediment to the company going public in recent years, given his exasperation over the decline in the company’s stock price in its first incarnation as a public company.

That decline came after Quintiles entered into a series of complex deals that befuddled the market. The deals included investing in pharmaceutical and biotechnology companies that also were its customers and, rather than accepting straight fee-for-services contracts, negotiating royalty payments tied to sales of customers’ drugs.

Speculation that Quintiles was planning to go public once again spiked in April when Gillings stepped down as CEO and brought in Tom Pike, a 22-year-veteran of Accenture, to run the day-to-day operations

Today, Gillings and four private equity firms – Bain Capital, TPG Capital, Temasek and 3i Corp. – own 94 percent of the company. Gillings’ compensation package totaled $6.4 million last year, which included a $1 million salary plus a bonus and stock options. Pike’s compensation totaled $8.9 million.

Quintiles was a major catalyst for the Triangle’s emergence as a CRO industry hub. Other major CROs that are based here or have a major local presence include INC Research, PRA International and PPD.

If successful, Quintiles’ IPO would be the largest for a Triangle company since Talecris Biotherapeutics raised about $950 million in 2009.

Talecris was later acquired by the Spanish company Grifols for $4 billion.

The Triangle went nearly a year without having a local company mount a successful IPO before Raleigh-based LipoScience raised $45 million last month.

Quintiles reported that it plans to use some of the money it raises from going public to pay down some of its $2.4 billion in debt.

Staff writer David Bracken contributed to this story.

Ranii: 919-829-4877

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