Simulations Plus (a leading provider of modeling and simulation software and services for pharmaceutical safety and efficacy) announced the acquisition of Pro-ficiency Holdings and its subsidiaries, a leader in providing simulation-enabled performance and intelligence solutions for clinical and commercial drug development. And Simulations Plus had acquired Pro-ficiency from QHP Capital, L.P. (management company for NovaQuest Private Equity) and Pro-ficiency’s minority shareholders for about $100 million in cash.
The deal expands Simulations Plus’ presence across the drug development continuum from establishing pre-clinical protocols to product commercialization, providing pharmaceutical and biotech companies with an end-to-end offering that includes clinical trial operations, medical affairs, and commercial market launches. And Pro-ficiency’s suite of software and services, developed with AI technologies, is a highly complementary and synergistic addition to Simulations Plus’ platform by expanding its capabilities to enhance clinical trial and launch training, data analytics, and outcomes.
What is the rationale for this deal? It expands Simulations Plus’ presence along the drug development value chain, utilizing its scientific skills, drug development expertise, data management acumen, predictive analytics, and simulations capabilities. And it broadens and differentiates Simulations Plus’ holistic offering to include clinical trial operations, medical affairs, and communications, strengthening the overall value proposition to life sciences customers.
This deal doubles the total addressable market (TAM), adding $4 billion of clinical simulation training, analytics, and medical communications. Plus, it broadens Simulations Plus’ platform and accelerates scale, increasing the aperture for continued M&A strategy and improving right-to-win as a strategic partner of choice.
The deal is being funded from existing cash and investment resources.
QHP Capital made the original investment in Pro-ficiency in 2021. Pro-ficiency completed the acquisitions of Fugitive Labs in 2022 and Compass Group Partners in 2023. And Procopio acted as legal counsel for Simulations Plus and Wyrick Robbins acted as legal counsel for Pro-ficiency and the sellers of Pro-ficiency.
KEY QUOTES:
“We are thrilled to announce the expansion of our suite of drug discovery and R&D solutions with this strategic acquisition of Pro-ficiency. This transaction brings together two businesses, each with complementary expertise and services that are grounded in science and focused on applying advanced technologies like AI to enhance actionable data analytics. Together, we will continue to assist our clients in improving their drug development return on investment and patient care delivery. With the integration of Pro-ficiency’s immersive simulation-enabled learning, data-driven insights, and medical communications platforms, we are approximately doubling our total addressable market by unlocking the significant growth potential of a $4 billion market opportunity, which is incremental to our $4 billion biosimulation market.
“This acquisition not only deepens our client engagement capabilities and relationships but also presents meaningful cross-selling opportunities to our shared customer base in life sciences. By further expanding our portfolio of critical solutions for efficacious and cost-efficient drug development and commercialization, we believe this acquisition gives us a distinct competitive advantage and will significantly enhance our ability to drive innovation and success within the sector. Furthermore, the transaction is expected to be accretive to our fiscal 2025 EPS.”
- Shawn O’Connor, Chief Executive Officer of Simulations Plus
“We are excited to join the Simulations Plus team, which has a well-established and recognized leadership position in modeling and simulations within the pharmaceutical and biotech community. Both teams approached this transaction with a growth mentality. We look forward to leveraging Simulations Plus’ specialized offerings and business development infrastructure to expand our combined market reach. Finally, our operations are complementary, our cultures are aligned, and together we believe we can elevate the performance of our mutual clients as well as attract new ones with our end-to-end solutions.”
- Michael Raymer, Chief Executive Officer of Proficiency
“We are very pleased with the growth and innovation we have seen these past few years at Pro-ficiency and we are excited to see them continue to improve clinical development as part of the Simulations Plus offering.”
- Michael Sorensen, Partner at QHP Capital
“With approximately $119 million in cash and investments available, this acquisition allows us to utilize the capital from our August 2020 follow-on public offering. Following the acquisition, we remain well-capitalized with no debt, have strong free cash flow, and will continue our capital allocation strategy and corporate development initiative to seek additional opportunities for strategic acquisitions, investments, and partnerships.”
- Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus
