Quintiles shares rise 11 percent in market debut

Thu May 9, 2013 11:23am EDT

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(Reuters) - Shares of drug research company Quintiles Transnational Holdings (Q.N) rose as much as 11 percent in its market debut, valuing the company at as much as $5.73 billion.

The Durham, North Carolina-based clinical trials company's initial public offerings is the largest among the 11 expected to be priced this week. The week could see the highest IPO volume since late 2007, according to market data firm Ipreo.

Other offerings that have been priced this week include those of residential mortgage company PennyMac Financial Services Inc (PFSI.N) and biotech company Receptos Inc (RCPT.O).

Quintiles raised $947 million in its IPO, more than planned, as it had priced 23.7 million shares at $40 each, compared with its plan to sell 19.7 million shares at $36 to $40 each.

Quintiles, founded in 1982, is backed by private equity players Bain Capital LLC and TPG Capital LP.

They became the lead investors in Quintiles in January 2008 after One Equity Partners sold its stake in the company. Britain's 3i Group Plc (III.L) and Singapore's Temasek Holdings are also investors in Quintiles.

The company is the largest provider of contract research services in the world to biopharmaceutical companies, including medical device and diagnostics companies.

Quintiles generated adjusted earnings before interest, tax, depreciation and amortization of $177.5 million on revenue of $4.9 billion in the year ended December 31, 2012.

The company's sales were 70 percent higher than its nearest competitor Covance Inc (CVD.N) said Morningstar analyst Lauren Migliore in a research report. Covance is valued at about $4.15 billion.

Quintiles spent about $135 billion on R&D in 2012, which will grow to about $139 billion in 2015, according to the prospectus it filed with the Securities and Exchange Commission.

Of all the new drugs approved between 2004 and 2011, Quintiles helped develop or commercialize 85 percent of the central nervous system drugs, 76 percent of the oncology drugs, and 72 percent of the cardiovascular drugs, according to Morningstar.

A recent slowdown in R&D spending did not have an effect on Quintiles' performance as the company focuses primarily on Phase II-IV clinical trials.

This has saved Quintiles from having to endure the steep pullback in early-stage spending, particularly for animal testing, toxicology, and preclinical services, that has plagued other contract research firms.

Quintiles shares were trading up 10 percent at $44.05 on the New York Stock Exchange on Thursday.

Morgan Stanley, Barclays and JPMorgan are the lead underwriters to the offering.

(Reporting by Tanya Agrawal in Bangalore; Editing by Sreejiraj Eluvangal and Joyjeet Das)

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