Dennis Gillings has a flair for numbers-and for good timing. He founded the pharmaceuticals research company Quintiles Transnational while working as a biostatistics college professor back in 1982, at a time when drug companies were increasingly overwhelmed by new research demands mandated by industry regulations. Gillings’ fledgling company- launched with a total of five employees-rode that wave, managing data for clinical trials required for FDA approval and providing consulting services to an ever-growing number of pharmaceutical companies.
Over the next 15 years, Gillings expanded services, moved into
But while Gillings recognized the opportunity such moves represented, Wall Street was not as forward thinking. By 2003, that gap in appreciation was sufficiently galling for the company’s London, UK-born, CEO to take the company private.
“I thought, these guys don’t understand the partnering strategies and IT strategies I’m talking about,’” recounts the 64-year-old CEO. “And I was so confident that I decided, why not buy the company back?
“I got it at a good time,” he adds. That’s something of an understatement. Gillings, who has homes in North Carolina, Nevada and Hawaii, emerged from the $1.75 billion buyout of shareholders with a hefty 25 percent chunk of the company-a good deal more than the typical CEO’s share in such private equity deals. In 2007, the Research Triangle, N.C.-based company’s revenues were $2.4 billion, and Gillings himself mentions a $2.5 billion to $3 billion range. Between 2003 and 2006 alone, an impressive 1.6 million patients were involved in Quintiles research projects. And today, the company has more than 21,000 employees in more than 50 countries around the globe. Gillings shies away from discussing specific clients, but isn’t shy about noting that Quintiles had a part in “either the development or commercialization of the world’s top 30 best-selling drugs and nine of the top 10 biotech drugs.”
He describes a company with three major areas of business: product development services, commercialization and strategic partnering solutions. Quintiles is best known as the market leader in contract research organization (CRO), the business of conducting clinical trials on behalf of pharma companies, providing product development services and helping to shepherd new drugs through the onerous approval processes-a $14 billion market. Lehman Brothers estimates that Quintiles won a 24 percent share of the $7 billion in new business generated in CROs in 2007. Companies-like Quintiles, Covance and PPD-that play in the CRO space use their specialized clinical expertise and technology to streamline the process and get drugs to market as much as 30 percent more quickly than their pharmaceutical company clients would manage internally.
“The combination of expertise and global scale enables efficiency,” explains Gillings. “You need soft- ware systems, skills outside the area in which you’re practicing, a lot of management and you’ve got to implement these laboratory feed-in, imaging feed-in systems. Plus, you need to simultaneously deal with the regulatory concerns and rules about import and export of countries around the world. That environment provides the opportunity to scale efficiencies.”
But the company has also been able to leverage that expertise in related areas, such as co-developing drugs, employing its fast-growing sales force and marketing research capabilities to commercialize new drugs and helping pharma companies fund growth through its strategic partnering group, NovaQuest. “Some of our customers asked, Are you going to share risk with us?’ which I think is a very valid question,” recounts Gillings. “So we said, Yes.’”
Since 2000, NovaQuest has created more than 80 pharma alliances ranging from making cash investments in development efforts to providing co-development services in exchange for a minority share in product royalty streams or equity based returns-services that put the company more directly into the pharma arena. The move seems a natural next step for Gillings, who founded Quintiles solely as a bio-statistical and data management company but moved steadily into other areas. “In the late ’80s, I added the whole of clinical trials in the mid-’90s, I added commercialization, and in the late ’90s I added pharma,” he says. “Now we’re beefing up our consulting in market analytics, commercial solutions and drug development.”“We see our business evolving to where we are the pharmaceutical industry partner who provides infrastructure on a global scale and, in the right circumstances, risk partnering so that we have a stake in the game.”