Informa PLC (Informa) has recently announced the sale of Pharma Intelligence to Warburg Pincus, the US private equity group, in a deal worth 1.9 billion GBP. This deal is part of a trend in which more technology and data analytics are being used to reduce the time to market for drugs, which is being driven by increasing pressure to make returns on investment.
Informa stated that they will retain 15% of Pharma Intelligence after the deal has been completed, which is expected to be in June 2022. Informa has also announced they will use some of the proceeds of the acquisition for a share buyback programme, with an initial 100 million GBP allocated to it. Adarsh Sarma, Head of Strategic Investments at Warburg Pincus, commented, ”We believe that demand for its services will increase as the world becomes more data-driven and focused on using predictive analytics to solve health issues and major diseases.”
Stephen Carter, Group Chief Executive at Informa, echoed this sentiment saying, “We are delighted to partner with Warburg Pincus and share their view on its future growth potential, hence, we welcomed an agreement that represented value today and growth and value tomorrow.” Analysts have hailed this as a great price for Informa, with the remaining business still being able to generate approximately 700 million GBP.
Pharma Intelligence is one of the world’s leading providers of specialist data for clinical trials, drug development and regulatory compliance in the pharma and life science analytics market, which is worth a total of 22 billion USD. Through the acquisition, Warburg Pincus acquires Pharma Intelligence’s full array of brands such as Pharmaprojects, Datamonitor and Trialscope. This could significantly bolster Warburg Pincus’s revenue, with Pharma Intelligence making a 55.3 million GBP profit before tax, accounting for approximately half of Informa’s 103 million GBP operating profit from their Information business in 2020.
Warburg Pincus will be joined in this acquisition by the Abu Dhabi based company Mubadala Investment Company. Warburg Pincus is looking to grow and invest in Pharma Intelligence while retaining the current management team in place at Pharma Intelligence. In addition, Warburg Pincus has a strong history within both the healthcare technology sector, with companies such as Nuance Communications, and information services such as Accelya and Fortius. This is a promising sign for their future with Pharma Intelligence, suggesting successful and profitable prospects for the two businesses. Adarsh Sharma stated that, “Warburg Pincus is uniquely placed to help the company achieve its growth potential,” referencing the fact they are one of the leading investors in both health tech and pharma. Alongside this they confirmed that Warburg Pincus are looking to continue to work closely with Informa after the acquisition to ensure there is a smooth transition and long-term success.
Informa announced that they were looking to divest their data and consultancy division in December with their 2021-2024 Growth Acceleration Plan II (GAP II) strategy, which is their four-year plan to focus on their academic markets and knowledge services. Within this plan, Informa flagged Pharma Intelligence, which accounted for 40% of their Intelligence unit in 2020, and it has drawn significant interest over recent months. Given the increasing demand for and implementation of data and analytics by drug developers, it is reasonable to predict that companies such as Pharma Intelligence will be crucial in years to come. This gives them significant growth potential and justifies the high levels of interest shown. On the announcement of this sale, Informa shares were up 5.7%, giving the company a total valuation of 8.6 billion GBP. This rise in stock price further highlights the positive reaction by investors in the plan to focus on these high growth markets. Informa is set to release their 2021 Full Year Results on 15 March 2022, which is expected to be in line with predictions of 1.8 billion GBP in Group Revenue and 375 million GBP of Adjusted Operating Profit.
The future of M&A for outsourced pharma services like Pharma Intelligence is promising. This deal represents the competition to acquire and develop new technologies to enable innovation and data-driven business, which will ultimately result in improved profitability. Therefore, it is likely we will see more acquisitions of companies such as Pharma Intelligence as they become further integrated into the future of medicine and drug development, with companies wanting to take advantage of their demand to improve their revenue.
By Stephen Wass
Sector Head: Hortense Comon