Syneos Bolsters Contract Research Reach With $400M Synteract Buyout
North Carolina is a mecca for biopharmaceutical contract service providers. One of the biggest in the state and the sector, Syneos Health, is getting even bigger through the acquisition of Synteract.
Morrisville, NC-based Syneos, which runs clinical trials for drug companies and also provides commercialization services for drugs that have reached the market, says Synteract will complement its own offerings. The smaller CRO, whose U.S. operations includes sites in Morrisville, Southern California, and New Jersey, mainly provides contract services to “emerging companies” that have not yet commercialized any products. According to Syneos’s third-quarter 2020 financial report, it’s paying $400 million cash to bring Synteract’s services and customers into the fold.
The small and mid-sized drug developers that are the mainstay of Synteract’s customer base represent a growth opportunity for Syneos, which focuses on serving larger companies.
Small and mid-sized companies continue to secure financing to support their research, and they need CROs to run their clinical trials, according to Syneos. Synteract says its expertise spans cancer, rare diseases, neuroscience, dermatology, and pediatrics. Privately held Synteract does not report specific financial data but it says growing demand has led to a double digit increase in its pipeline compared to last year.
Syneos, which is publicly traded, reported 2019 revenue that topped $4.6 billion, according to its annual report. At the end of the third quarter of this year, the company reported $63.4 million in net income on $1 billion in revenue.
The Syneos backlog---the CRO industry’s measure of expected revenue from services that have not yet started but are expected to begin soon---topped $9.7 billion, a nearly 17% increase compared to the same period a year ago. That backlog is now set to grow even more with the addition of Synteract.
Syneos, which employs 24,000 globally, is itself the product of dealmaking. Formerly known as INC Research, the CRO merged with inVentiv Health in a 2017 stock transaction that valued the combined company at about $7.4 billion. INC later changed its name to Syneos and went on to make additional deals, paying $100.1 million in 2018 to acquire Kinapse, a United Kingdom-based pharmaceutical industry consultancy.
Syneos’s acquisition of Synteract represents an exit for Amulet Capital Partners, the private equity firm that acquired the CRO for an undisclosed sum in 2016. Synteract employs about 700 across its global footprint.
NCBiotech has provided support to Syneos, funding an industrial internship at the company in 2018.
Syneos expects to complete its acquisition of Synteract by the end of this year, upon which the smaller CRO will become a subsidiary of the larger company, retaining its name and management team.