PPD (Nasdaq: PPDI) is already a pretty big player in Eastern and Central Europe, but its footprint there is about to get bigger. Last week, the Wilmington, N.C.-based contract research organization (CRO) announced plans to acquire AbCRO, a Bulgarian CRO founded eight years ago by two Americans. The price: $30 million.

The deal, if finalized, gives PPD immediate entry into Romania, Bulgaria, Serbia and Croatia. The acquisition also adds to offices PPD already has in Poland, Russia and Ukraine.

“We are looking to that region as a big contributor to our future growth,” says PPD chief operating officer William J. Sharbaugh. Sharbaugh pointed to the area’s relatively low density of clinical trials per population when compared with Western Europe, its well-developed health care infrastructure, and enthusiastic clinical investigators. Yes, several competitors are there, but many of their offices are still nascent, minimally staffed. PPD wants to get a jump on things in the region, which sponsors often ask for.  “Our customers are very interested in it,” Sharbaugh says.

Nine Offices

PPD’s first foray into the market came in 1995, with an office in the Czech Republic. Since, the company has opened offices in Hungary, Poland, Turkey, and the Balkans. PPD acquired the Smolensk, Russia-based InnoPharm last year, which put the company into Russia and Ukraine. InnoPharm was one of Russia’s first CROs. It had 300 employees.

Dana Leff of PPD

PPD and AbCRO had worked together for three years. When PPD needed to set up trials in parts of Central or Eastern Europe where it had no presence, it called AbCRO, a women-owned business which has about 230 employees across nine offices. AbCRO, Sharbaugh reports, always got PPD past potential stumbling blocks.

Difficult Nuances

“The regulatory systems there aren’t always very well understood [by Westerners],” says Sharbaugh. “Nor are many nuances in the standards of care.” AbCRO, however, gets it, he says. AbCRO was launched in 2000 by Dana Leff and Christa Pleasants. Leff was an MBA in Bulgaria working on a program to bring other MBAs to the country. While engaged in that, she began casting about for ideas for businesses to start there. Health care interested her.

A few calls to classmates from the University of Virginia’s Darden School of Business lead her to Pleasants, an oncology nurse whose employer, a biotech firm in Virginia, had just shut down. Together, the two decided to start a full-service CRO in what was then an all but untapped market: Central and Eastern Europe.

140 Trials

Over the company’s almost nine years in business, it has done about 140 trials in Phases II-IV, says Leff, explaining that many of them have been lengthy. Therapeutic areas have varied, though in the early days of the business, oncology accounted for one-third of AbCRO’s projects. More recently, the company has picked up diabetes and cardiology trials. As part of the acquisition, Leff will move to the UK and be PPD’s executive director for Central and Eastern Europe. Pleasants will also move to the UK to take a senior director position. The acquisition is slated to close by the end of the first quarter, Sharbaugh says. There will be no layoffs.

What’s next in that part of the world for PPD? Perhaps a bigger push into Russia. “At this point we’re certainly one of the larger CROs in that region, but we feel like Russia in particular, being such a large country, is untapped,” Sharbaugh says. “We are evaluating whether we’re going to continue to move eastward.”

PPD announced the pending AbCRO acquisition on the same day that it released mostly healthy earnings for the fourth quarter and 2008. Here’s a release about its recent financial performance.

—by Suz Redfearn