PPD to spin off drug-development division next year

Last summer, Fred Eshelman, the founder and top executive at PPD, handed the CEO reins to a former Army general so that he could spend more time reshaping the company's long-term strategy.

Late Tuesday, the Wilmington-based firm announced several major changes. For starters, PPD next year plans to spin off its drug-development division as a separate publicly traded company.

PPD, which employs about 1,400 in the Triangle and 10,000 worldwide, will keep its name and focus on the main business of providing contract research services for pharmaceutical companies. Most of the company's Triangle workers are involved in the contract research side.

The new company will work with other drug companies on new medicines, including a treatment for premature ejaculation that is already on sale in parts of Europe.

"We believe by separating this business from our core CRO business we can unlock the intrinsic value of both businesses," Eshelman said.

The move comes as PPD's stock has dropped about 22 percent in the past year. Its sales have slowed as pharmaceutical customers scale back development of expensive new drugs. Third-quarter revenue fell about 13 percent to $341.1 million.

Eshelman, who remains one of PPD's largest investors, is now the company's executive chairman. The UNC-Chapel Hill graduate founded PPD in 1985.

David Grange became the company's CEO on July 1.

PPD also announced Wednesday that it's buying a Chinese contract research organization to expand in that fast-growing market for new drugs. And it invested $100 million in Celtic Therapeutics Holdings, a partnership buying experimental medicines.

PPD shares fell $1.35 to $22.01 today.