ACCC concerned by Blackstone's proposed acquisition of I'rom

The Australian Competition & Consumer Commission (ACCC) has revealed that it has preliminary competition concerns with the proposed acquisition of site management organisation (SMO) I’rom Group by Blackstone Group, as detailed in a Statement of Issues published last week.

I’rom provides clinical trial management services to pharmaceutical, biotechnology and medical institutions, playing a critical role in the success of clinical trials. Back in May, it was announced that private equity funds and vehicles managed by Blackstone had entered into a definitive agreement with I’rom’s founder, President and CEO, Toyotaka Mori, to take the company private.

Nucleus Network, which is indirectly owned by Blackstone, and CMAX Clinical Research, which is owned by I’rom, are the two largest suppliers of phase 1 clinical trial services in Australia, which are an important step in trialling new therapeutic products such as medicines. The ACCC is therefore concerned that the proposed acquisition would likely have the effect of substantially lessening competition in the supply of phase 1 clinical trials in Australia.

“The proposed acquisition would bring the two largest providers in Australia under common ownership, with 59% of phase 1 trial beds in Australia, likely significantly lessening the competition faced by these providers,” noted ACCC Commissioner Dr Philip Williams.

The ACCC believes the proposed acquisition is likely to result in lower service quality and higher prices for customers. In addition, it considers that there are significant timeframes associated with setting up new phase 1 clinical trial units, such that the likelihood of timely and effective new entry or expansion in Australia is relatively low.

The ACCC has also noted that Blackstone has a majority interest in Precision Medicine Group, which operates the Precision for Medicine contract research organisation, providing services to drug sponsors and assisting with selecting phase 1 clinical trial service providers. There is therefore some concern that Blackstone may have the ability and incentive to restrict access to phase 1 clinical trial services by competing contract research organisations, Williams said.

The ACCC invites submissions in response to its Statement of Issues by 5 pm on 21 November 2024. The Statement of Issues is available here.

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