InVentiv Health, Inc.

Vantage Court North
200 Cottontail Lane
Somerset, New Jersey 08873
U.S.A.
Telephone: (973) 748-4666
Toll Free: (800) 416-0555
Fax: (732) 537-4912
Web site: http://www.ventiv.com

Public Company
Founded: 1997
Employees: 4,200
Sales: $556.3 million (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: VTIV
NAIC: 541614 Process, Physical Logistics Consulting Services

Somerset, New Jersey-based inVentiv Health, Inc., formerly Ventiv Health, Inc., provides outsourced sales, marketing, and other services to about 175 companies in the United States, Europe, and Asia involved in the pharmaceutical, biotechnology, and life sciences industries, including the world's 20 largest pharmaceutical companies. inVentiv divides its business among three segments. inVentiv Clinical assists clients with the clinical drug development and approval process, providing services such as data management and the recruitment of specialists. inVentiv Communications helps clients to shape and deliver messages, and also offers medical education and patient compliance programs. inVentiv Commercial helps clients to launch new products and maintain sales of established products. The unit also helps in the staffing of sales forces, the establishment of government compliance programs, and marketing support services such as tele-services, direct mail programs, mail-order pharmacy services, fulfillment, distribution, warehousing, and database management. Spun off from Snyder Communications in 1999, inVentiv is a public company listed on the NASDAQ.

FOUNDER'S LAUNCH OF BUSINESS CAREER IN 1984

The man behind the founding of inVentiv's parent company, Snyder Communications, was Daniel M. Snyder, who was to become better known as the owner of the National Football League's Washington Redskins. Born in New York in 1964, the son of a writer-journalist, he was an indifferent student. After high school he took business, speech, and drama classes at Montgomery College in Maryland before transferring to the University of Maryland where he continued to take business classes before dropping out to concentrate on a budding entrepreneurial career. In 1984, at the age of 19, he launched a business out of his parents' apartment leasing jets to fly college students to spring break destinations, a venture that according to Snyder's claim made him a millionaire. During the fall he operated Sports Tours, a company that bused students to away football games. Continuing to focus on the college market, Snyder in 1988 formed Collegiate Marketing & Communications to publish a magazine called Campus USA. He was able to enlist the financial backing of real estate and publish-ing mogul Mort Zuckerman and his partner Fred Drasner, but the venture proved disastrous. The slick magazine was supposed to provide brand advertisers with a way to reach a highly coveted audience by being distributed on 500 campuses, but too few corporations signed up and the publication soon folded after losing $5 million.

Out of the disaster of Campus USA came the seeds of Snyder Communications, however. "Though marketers like Procter & Gamble refused to advertise in his magazine," according to Forbes, "they were happy to pay him to get college kids to try Crest. Zuckerman and Drasner put up another $1 million." Snyder formed Snyder Communications to pursue his new college marketing idea. When the sampling idea failed to take off, Snyder began doing direct marketing for Procter & Gamble by transferring their print ads to standardized WallBoard display ads, which he then placed throughout the campus. The next step was to apply this idea to other targeted audiences. "It was a nice niche business," reported Forbes, "that Snyder soon expanded into field sales and services for telecommunications companies. He landed a big account from AT&T by marketing long distance service to anyone with a foreign-sounding last name, and hired telemarketers who collectively spoke 23 languages."

By the time Snyder took his company public in 1996, and in the process became the youngest CEO on the New York Stock Exchange, four-fifths of his $83 million in revenues came from two telecommunications customers: AT&T and MCI. Yet within a matter of months of the initial public offering, Snyder Communications changed course, becoming involved in direct marketing and healthcare marketing. The assets of the latter formed a new division called Snyder Healthcare Services, inVentiv's predecessor.

To build up Snyder Healthcare, the company went on an acquisition spree. In January 1997 MMD, Inc., a marketer of pharmaceutical products, was acquired to form a foundation for the division. This was followed in August of that year with the purchase of Halliday Sales, providing similar contract sales capabilities in the United Kingdom. At the end of the year, Snyder Healthcare beefed up both of these operations with the acquisition of Malvern, Pennsylvania-based Pharmsflex, Inc., for $24.5 million, and Winchester, England-based Rapid Deployment Group Ltd., which in addition to the United Kingdom operated in Hungary. Next, in February 1998, the division paid $71 million for Health Products Research, Inc., and its French affiliate, Healthcare Promotions, L.L.C. A month later another French pharmaceutical marketing company, Paris-based Publimed Promotions S.A., was added.

The division's European presence also was bolstered by the acquisition of another French firm, CLI Pharma S.A. and Germany-based MKM Marketinginstitut GmbH. In August 1998 Snyder Healthcare acquired Greenwich, Connecticut-based Clinical Communications, adding marketing services such as satellite-delivered training services, CD-ROMs, and custom publications for pharmaceutical companies. Snyder Healthcare also enjoyed success signing up major clients in its first two years, including Bristol-Myers Squibb, Eli Lilly, Pfizer, Hoechst Marion Rousell, Abbott Laboratories, Upjohn, and Johnson & Johnson.

By the end of 1998, Snyder Healthcare generated sales of more than $320 million, employing about 2,800 people in the United States and more than 4,500 in the United Kingdom, France, Germany, Ireland, Holland, and Hungary. The success of Snyder Communications had made Dan Snyder a rich man, and in 1999 he decided to use some of that wealth to buy the Washington Redskins, a team whose home games he had attended since childhood with his father, a season ticket holder. Before Snyder began to devote most of his attention to the running of the Redskins, he engineered a spinoff of the Snyder Healthcare division, a move that was expected to increase shareholder value because investors had been uncertain about how to view Snyder Communications, whether as a healthcare firm or an advertising and marketing company. The split was further intended to facilitate the growth of Snyder Healthcare, which was looking to take advantage of pharmaceutical companies increasing their outsourcing of sales and marketing in order to save money and focus on the research and development of new products.

COMPANY PERSPECTIVES

inVentiv Health's customized solutions enable pharmaceutical and biotech clients to not only achieve their goals, but to do so with flexibility and cost-effectiveness.

SPINOFF IN 1999

In September 1999, Snyder Communications formed Ventiv Health Inc. and folded in the Snyder Healthcare assets. Stockholders received one share of the new company for every two shares of Snyder Communications they owned. While Dan Snyder initially served as chairman, running Ventiv on a day-to-day basis as CEO was Eran Broshy, who had come on board in June 1999. Holder of an undergraduate degree in civil engineering from the Massachusetts Institute of Technology, a master's from Stanford University, and an M.B.A. from Harvard University, Broshy had 14 years of experience in the healthcare field while a partner at The Boston Consulting Group, working on a myriad of matters with a wide range of clients, including drug companies, managed care organizations, and academic medical centers. In the two years prior to joining Ventiv, Broshy served as CEO for Coelacanth Corporation, a biotechnology company.

After producing revenues of $344.7 million in 1999 and a net loss of $6.8 million, Ventiv began its first full year as an independent company. It expanded its operations with the launch of two new divisions. The first, Ventiv Integrated Solutions, provided companies, especially those in the early stages of development, with a complete package of outsourced marketing services, including product management, market research and analysis, promotion, and sales execution. The second division, E-Ventiv, grew out of a March 2000 alliance with New York-based RxCentric, Inc., which delivered pharmaceutical information to physicians through the Internet. The formation of E-Ventiv soon followed to leverage the power of the Internet for clients. It was subsequently bolstered by a strategic alliance with HeliosHealth.com, making clients' sales and marketing information available on the company's more than 1,000 interactive kiosks located in the waiting rooms of physicians. For the year, Ventiv experienced a 21 percent increase in sales to $416.7 million in 2000 while recording net earnings of $16.8 million.

The contract sales business of Ventiv experienced a major change in the early 2000s, due in part to Quintiles Transnational Corp., which in 1999 moved beyond the flat-fee arrangements that had been in place to sign a cost-and-profit sharing deal with CV Therapeutics. Ventiv soon followed suit. This new type of incentive-laden contract worked for both the client and sales organization. The latter had to lay out cash that it would not recoup if it failed to perform, but Ventiv and its peers were also in line to achieve greater profits if they succeeded. Another trend that worked in favor of Ventiv was a shift in the pharmaceutical industry away from blockbuster drugs to specialized drugs. Small biotechnology companies that specialized in this area did not have the marketing infrastructure to launch a new product and became natural customers for outsourcers such as Ventiv. By the same token, large pharmaceutical firms, faced with the loss of massive sums of money as patents on blockbuster drugs expired, were eager to find ways to cut costs, and turning to contract sales operations made sense. They could save money, primarily because they did not have to pay the salaries of full-time employees during slack periods.

Ventiv increased revenues to nearly $400 million in but lost $58.5 million due to charges incurred from restructuring and discontinued operations and to lower operating margins. More restructuring followed in when Ventiv took steps to focus its business by selling off or exiting unprofitable, noncore businesses. A Connecticut-based medical education unit was sold in May and a month later a similar Georgia-based unit was cast off. The company also began to exit the European market to concentrate on its U.S. businesses. In September 2002 Ventiv Health Germany was divested, despite being profitable, and in October U.K.-based Contract Sales Organization, which had been losing money and offered little in the way of cross-selling opportunities, was sold for a total consideration of $12 million. Ventiv also continued to take steps to better control costs while maximizing its infrastructure to offer customers complimentary service offerings. As a result of these changes, sales in 2002 dipped to $215.4 million, but the company was able to turn a net profit of $7.9 million.

KEY DATES

1997:

The company is founded as a division of Snyder Communications.

1999:

The unit is spun off as Ventiv Health Inc.

2002:

The European businesses are divested.

2005:

InChord Communications is acquired.

2006:

The name is changed to inVentiv Health.

SELLING THE EUROPEAN OPERATIONS IN 2003

Ventiv sold its Hungary-based operation in early 2003 and by September 2003 had completely divested its European businesses. For the year, Ventiv increased sales to $224.5 million. Net income decreased to $5.8 million, the result of $4.1 million in losses from discontinued operations. With the ground prepared, the company was ready to implement an aggressive expansion program. Ventiv completed several acquisitions in 2004, adding a number of new services. New Jersey-based Franklin Group, Inc., was acquired in June, adding pharmaceutical compliance services and patient assistance programs. Next, in September 2004, Ventiv acquired Connecticut-based Smith Hanley Corporation, provider of clinical staffing and recruiting services. This business was then supplemented two months later with the addi-tion of HHI Clinical & Statistical Research Services, L.L.C., a Baltimore, Maryland, company that specialized in statistical analysis and data management services for pharmaceutical companies. Ventiv also grew internally in 2004, adding new service offerings such as Ventiv Recruitment Services, Ventiv Professional Development Group, The Therapeutics Institute (providing clinical education services), and the Total Data Solutions Division, which gathered and managed field sales information. As a result of the expansion effort, sales surged more than 50 percent to $352.2 million in 2004 and net income improved to $31.1 million.

The growth program continued in 2005 when Ventiv paid $13.6 million in cash and stock for Pharmaceutical Resource Solutions L.L.C., a Philadelphia, Pennsylvania-area company that provided compliance management and marketing support services. Later in the year, Ventiv completed the largest acquisition in its history, paying $196.8 million in cash and stock for ImChord Communications, Inc., an Ohio marketing company that was the largest independently owned healthcare communications company, composed of ten specialty-communications companies and a network of agencies in ten markets around the world. In one stroke Ventiv became an industry powerhouse. In addition to the contract sales, staffing, compliance, and other services it had to offer, the company included advertising, branding, and marketing expertise.

Revenues increased to $556.3 million in 2005 and net income rose to $43.9 million, impressive totals that were overshadowed by Ventiv's potential for continued growth. In the first quarter of 2006 Ventiv completed three acquisitions: Adheris, Inc., a leader in patient compliance and persistency programs; Jeffrey Simbrow Associates, Canada's top healthcare marketing and communications agency; and Synergos, Inc., a company expert in the management of clinical trials.

Because of the company's expanded service offerings, management decided to conduct a re-branding initiative in order to make it clear to the industries it served that it had much more to offer than the contract sales services associated with the Ventiv name. Hence the company announced that it would adopt a new name, inVentiv Health, as well as a new tag line, "Accelerate Your Vision." In addition, the business was reorganized into three business segments: inVentiv Clinical, inVentiv Communications, and inVentiv Commercial.

PRINCIPAL COMPETITORS

Access Worldwide Communications, Inc; IMS Health Inc.; Quintiles Transnational Corporation.

FURTHER READING

Behr, Peter, "Spinoff to Split Snyder in Two," Washington Post, June 24, 1999, p. E01.

Gandel, Stephen, "Writing New Prescriptions for Drug Sales," Crain's New York Business, February 7, 2000, p. 27.

Kroll, Luisa, "Changing the Game Plan," Forbes, December 13,1999, p. 81.

Lau, Gloria, "Sales Contractor Bullish on Medical Trend," Investor's Business Daily, February 14, 2001, p. A10.

Pandya, Chhandasi, "Ventiv Happy to Help Out Drug Makers," Star-Ledger (Newark, N.J.), December 17, 2004,p. 026.

Warner, Judy, "New Kid on the Block," Adweek Eastern Edition, April 20, 1998, p. 12.

Wise, Christina, "Spreading Out the Workload," Investor's Business Daily, August 15, 2005, p. B02.

Wolf, Barnet D., "Ventiv Health to Westerville, Ohio, Communications Firm for $185M," Columbus Dispatch (Columbus, Ohio), September 8, 2005.