Pharmaceutical Product Development agrees to be bought for $3.9 billion

Layers of pharmaceutical companies operate below the level of the famous firms that pitch pills on TV. One big, unheard-of-by-the-masses operation - Pharmaceutical Product Development Inc. - agreed on Monday to be bought for $3.9 billion by private equity funds run by the Carlyle Group and Hellman & Friedman.PPD is a clinical research organization, meaning it does research but also conducts clinical trials of pharmaceutical products for other drug and medical device companies. In recent years, better-known drug companies have outsourced more work to companies like PPD. The company has 11,000 employees in 44 countries on six continents, including about 350 in three Philadelphia-area facilities - Wayne and Blue Bell in the Pennsylvania suburbs and Hamilton, N.J., near Trenton.The proposed deal would pay $33.25 in cash per share for all outstanding shares, representing a 29.6 percent premium over PPD's Friday closing price. The shares closed Monday at $32.28, up $6.62 or 25.80 percent from Friday.The company, whose headquarters is in Wilmington, N.C., has 30 days to solicit or listen to competing offers. The private-equity buyers can match any offer PPD receives. The board of directors recommended accepting the offer, under which PPD would become a private company."The sale of PPD to the Carlyle Group and Hellman & Friedman provides an attractive return for our shareholders, while also ensuring a secure foundation and commitment to investment, innovation, and excellence for PPD clients and employees as the company builds on its 25-year history of success," Fred Eshelman, founder and executive chairman of PPD, said in a statement.The statement says financing consists of a combination of equity provided by Carlyle Partners V L.P., a $13.7 billion U.S. investment fund, and Hellman & Friedman Capital Partners VII L.P., an $8.9 billion fund, with external debt financing to be provided by Credit Suisse, JP Morgan, Goldman Sachs, and UBS.The PPD 2010 annual report said it owned six buildings, including a 146,000-square-foot facility in Wayne. That facility includes a unit that works on vaccines and biologics, meaning drugs produced from living cells rather than from chemicals. There was no word Monday on whether the proposed sale would mean layoffs. One of the more recent hires was chief executive officer Raymond Hill, who joined the company and board of directors Sept. 16 after working for the IMS Consulting Group."Nothing will change in our day-to-day operations, and our management team is working closely together to ensure the company remains focused on our current objectives and strategy," a PPD spokeswoman said.

PPD Appoints Neil McCullough, Ph.D., Vice President of Quality Management Systems

PPD, Inc. (PPDI 23.36, +0.11, +0.47%) today announced it has named Neil McCullough, Ph.D., as vice president of quality management systems. In this role, Dr. McCullough will provide strategic direction for quality management across all lines of business and ensure full compliance with global regulations guiding the biopharmaceutical industry.

"Providing superior quality services directly impacts our ability to meet and exceed client expectations for safety, compliance, integrity of data and efficiency," said David Grange, chief executive officer of PPD. "Having led quality assurance initiatives for pharmaceutical companies for more than 20 years, Dr. McCullough brings exceptional leadership skills and quality expertise that enhance our ability to deliver for clients in today's changing drug development environment."

Prior to joining PPD, Dr. McCullough spent nine years at Pfizer Inc. He most recently served as senior director of the global research and development division good clinical practice and good laboratory practice quality assurance leadership team. His responsibilities included designing and implementing a risk-based approach to quality assurance to target audits across all functional areas of global clinical development.

Prior to joining Pfizer, Dr. McCullough served as a consultant to GlaxoSmithKline's division of manufacturing, where he implemented standards, procedures and policies to meet regulatory requirements. He was also site technical director at Polychem Limited and began his career as a manufacturing quality assurance laboratory technician at Beecham Group Ltd.

Dr. McCullough earned his doctorate in chemistry from The University of Kent at Canterbury in the United Kingdom and is completing a master's in pharmaceutical medicine from Harvard University and the Royal College of Physicians in Ireland (Hibernia College).

PPD is a leading global contract research organization, celebrating 25 years of providing drug discovery, development and lifecycle management services. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 41 countries and more than 10,500 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients and partners accelerate the delivery of safe and effective therapeutics and maximize the returns on their R&D investments. For more information, visit www.ppdi.com.

Pharmaceutical Products Lifts Dividend 20%

Despite tough times of late -- or perhaps because of them -- Pharmaceutical Product Development(PPDI Quote) hiked its annual dividend by 20%, the company announced Tuesday.

Last week, PPD said it would swap out its chief executive in a move that seemed to confuse and worry investors more than anything else.

"There are probably more significant operational issues at PPD than we previously believed," wrote one stock analyst in response. (The company moved its previous CEO to a new role -- executive chairman -- and promoted a board member, a retired brigadier general named David Grange, to CEO.)

And about a month ago, when the Wilmington, N.C., company released first-quarter earnings that met expectations, it also cut both its top- and bottom-line forecasts for the rest of the year. Its rationale for the outlook was generic: slumping demand for its services amid the recession (the company conducts drug research on contract for pharma companies).

PPD's stock price has suffered accordingly, and the increased dividend may have been an effort by management to halt those declines. Shares of the company have tumbled 33% year-to-date, even while the broader market has rallied.

On Tuesday, PPD stock closed at $19.83, up 2.6%, or 51 cents, on heavier-than-average volume.

The company said it will pay out an annual dividend of 60 cents a share, or 15 cents a quarter, up from last year's 50 cents per share.

PPD founder turns over day-to-day operations to Special Forces vet

WILMINGTON, N.C. — Fred Eshelman, founder of Pharmaceutical Product Development, is now the executive chairman of the company in a change of command among the top ranks at the contract research organization.

Eshelman, who has donated millions of dollars to UNC-Chapel Hill where he earned a degree in pharmacy, is turning over the chief executive role to David Grange, a former U.S. Special Forces soldier and member of Delta Force.

As part of the management shakeup at the Wilmington-based company, long-time chairman Ernest Mario gives up that role to become the lead independent director. Mario has served as non-executive board chair since 1993.

Eshelman launched the company in 1985. He is the firm's largest shareholder with nearly 8 million shares of PPDI's stock.

The moves were announced by PPD (Nasdaq: PPDI) after the markets closed Tuesday. PPD recently missed Wall Street expectations by a penny in its quarterly earnings report. The entire CRO industry has suffered in recent months as the economy has slowed, numerous drug giant mergers have taken place, and several drug trials have been cancelled. PPD provides drug trial services for pharmaceutical firms with an emphasis on later-stage testing.

“General Grange brings a great combination of global geographical experience and knowledge, demonstrated leadership from his business and military careers, financial management experience and first-hand knowledge of PPD as a member of our board since 2003,” Eshelman said in a statement. “I look forward to working closely with General Grange and his executive management team to chart our course and execute our business plans to drive long-term shareholder value.”

PPD operates a major facility in Research Triangle Park with some 1,900 employees and has nearly 4,000 workers in its home state. It employs more than 10,000 people in 38 countries.

The changes take effect July 1.

“In his new position, Eshelman will continue to be responsible for providing strategic direction to the company and overseeing the implementation of the company’s strategic and business plans, including the company’s compound partnering business,” PPD said in a statement. “Working closely with Grange, he will also focus on key initiatives, strategic outsourcing plans and core aspects of the company’s operations.”

UNC-CH named its pharmacy school after Eshelamn last year.

Grange, a retired brigadier general, has spent the last 10 years at the McCormick Foundation where he has served as CEO since 2005. The foundation is one of the nation’s largest with more than $1 billion in assets.

Grange spent 30 years in the U.S. Army with stints in the Green Berets and the secretive Delta Force. He also served as commander of the First Infantry Division.

Pharmaceutical Product Development Buys AbCRO

Pharmaceutical Product Development, Inc. said it has completed the acquisition of AbC.R.O., Inc., a contract research organization operating in Central and Eastern Europe. 

The company said that the acquisition strengthens PPD's ability to provide a range of clinical trial management and monitoring, patient recruitment, site identification and regulatory affairs services to its growing client base in the Balkans and surrounding countries.

PPD said that more than 230 employees have joined the firm with the acquisition, including co-founder and CEO Dana Leff, and co-founder and chairman Christa Pleasants.

AbCRO marks PPD's second acquisition in Central and Eastern Europe. PPD acquired InnoPharm, an independent contract research organization based in Smolensk, Russia, last year.

Wilmington, North Carolina-based Pharmaceutical Product Development is a contract research organization providing discovery, development and post-approval services as well as compound partnering programs. The company's clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations.

PPD has offices in 38 countries and around 10,500 employees.