INCR and inVentiv

INC Research and Inventiv Health to merge

Combined company will have revenues of $3.2 billion and a market cap of $7.4 billion


The No. 7 (by revenue) contract research organization, INC Research, and the No. 6 CRO, inVentiv Health, are merging, creating what the company managements expect will be the No. 3 CRO, plus, by virtue of inVentiv’s “contract commercial organization,” a leading position in that space. The CCO business includes contract sales, communications, medical affairs, adherence programs and consulting services. Together the merged company is designed to span a range from Phase I-IV clinical research to commercial activity, with “commercial solutions informing accelerated clinical trial design include market access, data-driven real world evidence, advocacy relations and medical affairs.”

INC Research, publicly held, will own 53% of the combined company; inVentiv, owned primarily by two private equity firms, will own the rest and those two companies, Advent International and Thomas H. Lee Partners, will maintain ownership and have seats on the board. Alistair MacDonald, INCR CEO, will serve as CEO of the combined company, and Michael Bell, inVentiv CEO, will become Executive Chairman. The company HQ will be INCR’s, in Raleigh, NC; both companies have extensive non-US holdings. Total employment will be over 22,000, and although cost synergies of around $100 million are expected to accrue to the combination, no mention was made of layoffs.

There has been consolidation in the CRO space; in recent years, Covance was acquired by LabCorp; Quintiles and IMS Health merged, and now inVentiv and INC Research. Recently, the No. 3 CRO, Parexel, nearly the same size as inVentiv, announced an employee-reduction plan and is reportedly putting itself up for sale.

The CRO/CCO blend parallels what has been going on in contract manufacturing, with leading CMOs becoming so-called contract development and manufacturing organization, blending clinical and commercial-scale manufacturing. In explaining the rationale for the merger, INCR management stressed the large size of the commercial-outsourcing market (some $150 billion), of which only 16% is currently outsourced. The growth of specialty biopharma, with its more complex service requirements yet non-blockbuster markets (generally), is a factor.