Will Quintiles go public?

Powerful company, charismatic leader dominate a lucrative niche

Numbers are dear to Dennis Gillings, and the founder and chief executive of Quintiles Transnational doesn't like sharing many of them. Four years after he bought out shareholders for $1.75 billion and took Quintiles private, Gillings no longer answers calls from Wall Street stock analysts curious about sales, profits and debt.

He won't get more specific about the Durham company's revenue than to say it will be "comfortably" more than $2 billion this year.

But the best-kept secret is the value of new contracts Quintiles has booked, a yardstick of how well the company is doing in helping large drug makers test and sell new medicines.

Trying to penetrate the secrecy, Wall Street has been buzzing all year that Quintiles, the world's largest contract drug researcher, might soon return to the public stock market.

"There are always reasons why being public would be better than being private," Gillings said, flashing a smile. "Right now, it's hard to find these reasons."

Drug makers, investors and competitors would be keenly interested in Quintiles' numbers, which the company would have to reveal should Gillings decide to start selling Quintiles stock to the public again.

Lack of information about Quintiles' expenses and profit margins makes it tougher for drug makers and competitors to negotiate contracts when Quintiles is a bidder, said David Windley, a Jefferies & Co. analyst who for years has tracked contract research organizations.

Also, investors worry that, given Quintiles' size, the unknown data might skew growth rate estimates for the entire industry of contract research organizations. Analysts figure that the company generates at least 60 percent more in annual revenue than the next largest player, PPD in Wilmington. Like many of the larger of Quintiles' competitors, PPD is publicly traded.

"Nobody knows [Quintiles'] bookings number," Windley said. "I would string somebody up at high noon if I could get that number."

Quintiles' debt is another question. Gillings borrowed about $840 million from institutional investors to take the company private. In March 2006, a refinancing deal increased Quintiles' debt to $1.2 billion, said debt analyst Jessica Gladstone of Moody's Investors Service.

Gladstone declined to say how much Quintiles owes now. But Moody's has maintained a junk rating on Quintiles' corporate debt for four years, she said. The rating is usually reserved for companies with a high and risky debt load.

Curiosity about Quintiles' numbers is particularly high in the Triangle -- a hotbed of drug development and contract drug research -- where the company is considered a flagship of entrepreneurial success. Quintiles employs nearly 20,000 worldwide, including 1,300 in Durham.

Building new digs

A $50 million headquarters is under construction at Page Road and Interstate 40 to accommodate the 2,000-member work force Quintiles expects to employ by 2012. Reaching its employment goal would win the company as much as $25 million in state and county incentives.

Upgrades in technology and the introduction of cash performance rewards -- two changes Quintiles made in the past four years -- have made recruiting employees easier, Gillings said.

For years, Quintiles acted mostly as a supplier of talent to the industry, Gillings said.

"Now, we get a lot of people coming to us for jobs," he said. "The word is out that we're moving to a more sophisticated, performance-driven system. That's more appealing to the high-fliers."

Gillings, a mathematician and former professor of biostatistics at UNC-Chapel Hill, has great respect for measuring. He appreciates the discipline that numbers promote, whether to improve drug safety, gain new business or assess job performance.