Who Wants to Buy Some Drugs?
If you're looking for an opportunity in the drug world, Pharmaceutical Product Development (NASDAQ: PPDI) is reportedly considering a sale. The news is not official, and comes from unnamed sources to the Wall Street Journal. It is unknown if these sources are within the company, within a potential partner, or simply industry experts.
For their part, PPD is trying to downplay the rumors.
“While the company generally has a policy of not commenting on speculation,” said Fred Eshelman, executive chairman of PPD, “we want to assure our customers and employees that the company remains focused on executing its long-term business strategy. We are absolutely dedicated to performing for our customers and committed to executing the important research programs that they have entrusted to us.”
“We are looking at our long-term plan and our capital structure to see if there are any actions, which might create value at this time. We are not engaged in any discussions around a combination with other clinical research providers. We remain laser-focused on executing our business and serving our customers with the quality and service they expect and deserve,” Eshelman added.
Translation: There might just be some truth to these rumors.
PPD is a global contract research organization providing drug discovery, development and lifecycle management services. Their clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations.
They have offices in at least 44 countries and more than 11,000 employees 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.
PPD is not the only competitor to go through the (potential) sales process. Their smaller rival, PRA International, is looking for a buyer at around a $1 billion price point. PPD has a market cap of around $3.2 billion, so it could fetch significantly more than PRA.
ACTION ITEMS:
Bullish: This news could be bullish for similar companies such as Covance (NYSE: CVD), PAREXEL (NASDAQ: PRXL), and Charles River Labs (NYSE: CRL)
Bearish: Traders might want to consider chasing PPDI here. If no deal is forthcoming, the stock should give back all of its gains. We have seen this in other names, such as Seagate Technology (NASDAQ: STX).
