Equity Firm Avista Said to Buy Drug Researcher INC for About $600 Million

Avista Capital Partners and Ontario Teachers’ Pension Plan said they will buy INC Research Inc., a contractor that runs clinical trials for drug companies.

The deal is valued at $600 million, a person with direct knowledge of the matter said before the purchase was made public. The person declined to be identified because the negotiations were private. INC’s management, including chief executive officer James Ogle, will stay after the anticipated close of the transaction in the fourth quarter, the buyers said today in a statement.

Avista’s purchase of INC Research is at least the second acquisition of a contract research organization announced this week. Medco Health Solutions Inc., the largest U.S. pharmacy benefits manager by revenue, said Aug. 16 it would buy closely held United BioSource Corp., based in Bethesda, Maryland, for $730 million. Revenue for drug-testing companies is projected to reach $20 billion in 2010, according to the Association of Clinical Research Organizations, a trade group.

“We are confident INC Research will continue to capitalize on favorable trends in the clinical development outsourcing market and utilize its global reach to enhance its market share,” said Neil Petroff, Ontario Teachers’ executive vice president and chief investment officer, in the statement.

$60 Million Earnings

INC Research, based in Raleigh, North Carolina, is being purchased from a group led by Crosspoint Venture Partners and Adams Street Partners, Avista said in its statement. The drug researcher has annual earnings of about $60 million before interest, tax, depreciation and amortization, according to the person who declined to be named before the deal was announced. The company has about 2,000 workers and conducts clinical trials in 40 countries, according to spokeswoman Trisha Vonder Reith.

INC was founded in 1999 as a research organization focused on disorders of the central nervous system, and has expanded to conduct studies in heart disease, oncology, women’s health, vaccines and other areas, she said.

“Avista Capital Partners and Teachers’ Private Capital are well-regarded investors in health care, and we look forward to benefitting from their extensive industry knowledge and experience,” Ogle said in the statement.

To contact the reporters on this story: Cristina Alesci in New York at Calesci2@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Ellen Gibson in New York at egibson9@bloomberg.net

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