Private equity moves into clinical trials

Private equity’s expansion into the clinical trial industry is accelerating and may reshape how medical studies are conducted and overseen. The growing consolidation of research sites and ethics review boards raises concerns about trial safety, the long-term impacts on patients, and the cost of care.

Analysts have noted that clinical trial sites are now among the most sought-after segments of the pharmaceutical services industry. Firms that once focused on physician practice management acquisitions have pivoted to life sciences due to the promise of strong returns. Recent deals illustrate the momentum in the clinical trial sector, particularly in add-on acquisitions that consolidate individual clinical trial sites under a single platform brand. 

In September, Rovia Clinical Research rolled up Study Metrix and Coastal Research Institute.  Rovia Clinical, a platform company of Gauge Capital, has already consolidated several clinical research sites, including East Coast Institute for Research (ECIR), Universal Axon Clinical Research (UACR), and IMIC, Inc. Clinical Research Center.  

Other clinical research trial sites and pharmaceutical acquisitions from September include:

• QHP Capital’s growth investment in Vector Clinical Trials. Vector Clinical Trials (formerly Las Vegas Medical Research) is a clinical research site in Las Vegas.
• Alta Thera Pharmaceuticals received a growth investment from an undisclosed firm. The company is a developer of specialty pharmaceuticals intended to serve pediatric cardiac patients and adult patients with atrial fibrillation.
• SERB Pharmaceuticals, a platform company backed by Charterhouse Capital Partners, acquired Y-mAbs Therapeutics, a commercial-stage biopharmaceutical company focused on the development and commercialization of antibody-based therapeutics for cancer treatment.

Private equity is targeting the clinical trials sector because it is fragmented, and consolidation may allow it to extract profits. Firms are attracted by the prospect of generating returns through operational efficiencies, such as accelerating timelines or reducing costs, without bearing the risk of whether a drug ultimately succeeds.

The consolidation trend in clinical research trials mirrors broader trends in private equity health care acquisitions, where add-on acquisitions have reduced competition. Consolidation across the health system has been a significant driver of higher patient costs, enabling platform companies to set costs with little regard to access or equity. Similar dynamics could emerge as private equity-backed groups roll up clinical research sites. As these consolidations multiply, the concern is that fewer, larger clinical research platform companies could gain disproportionate market power, enabling them to demand higher fees for their services. 

In addition to research sites, private equity has also expanded into institutional review boards (IRBs), a critical area of research oversight. These boards are responsible for ensuring that studies involving human participants minimize unnecessary risk and that participants are adequately informed about potential harms. According to a 2023 Government Accountability Office (GAO) report, private equity’s shift into IRBs has been accompanied by significant consolidation, driven by private equity investment. Senators Elizabeth Warren, Sherrod Brown, and Bernie Sanders raised concerns that a for-profit model might create conflicts of interest, potentially incentivizing faster approvals at the expense of thorough ethical review.

A 2024 New York Times investigation into Alzheimer’s drug trials provides an example of private equity’s impact in the clinical trial and institutional review board sectors. The report described how a controversial secrecy clause in a study involving the drug Leqembi was approved by an IRB operated by Advarra, a company backed by private equity. The article noted that by 2021, just two private equity-backed firms, Advarra and WCG, reviewed 92 percent of drug trials overseen by independent IRBs, a concentration that could compromise objectivity. The Leqembi drug trial resulted in brain bleeding or swelling in more than 100 of the 274 trial participants. Two trial volunteers died. Advarra had approved a “secrecy provision” in the Leqembi trial where participants would be tested for genetic profiles that meant they faced higher risks of brain injuries from receiving the drugs, but not informed of the results. Alzheimer’s experts and bioethicists told the New York Times that the clauses undercut the principle of informed consent.

Cost-cutting tactics and incorrectly approved trials have real human impacts. Clinical trials help ensure potential new interventions are safe and effective. It is imperative that participant rights are protected and that research is conducted ethically, to protect clinical trial participants from risk and to prevent dangerous interventions from being approved and instituted. The integrity of clinical trials depends on maintaining public trust, protecting participants, and ensuring that science rather than short-term financial returns guides the pursuit of medical innovation.