MEDICINE MEN: A Raleigh private-equity group eyes opportunities in financing innovation in drug discovery and healthcare services.

• Author: Mildenberg, David

It's been half a century since London native Dennis Gillings took a job as a biostatistics professor at UNC Chapel Hill, and more than 40 since he launched a five-employee company that became Quintiles and later, Iqvia, which is now valued at $35 billion.

While no longer active in North Carolina, Gillings' vision of making drug development a more statistics-oriented and efficient process keeps paying big dividends for the state. That includes a burgeoning private-equity investment company, of which he remains an investor.

QHP Capital's roots date to 2015 when Jeff Edwards joined NovaQuest, the Raleigh-based company spun out of Quintiles in 2010 by Gillings and other former Quintiles managers. NovaQuest's main focus is providing financing for late-stage clinical research trials, a sometimes complex process that didn't fit conventional bank lending strategies. NovaQuest has raised $2.5 billion and managed $3.6 billion in assets.

Beyond project financing, Gillings also saw an opportunity to tap his team's industry expertise and contacts to start a private-equity business. To lead the charge, he tapped Edwards, a PE executive at the Texas Teacher Retirement System in Austin, who joined in August 2015. A year later, Michael Sorensen joined from PE giant BlackRock.

Eight years since inception, QHP Capital has about $2.5 billion of assets under management after making 10 investments in "picks and shovels" companies that are part of the medical services and technology. It has made 12 add-on acquisitions. The firm has raised $875 million in two funds.

The PE firm targets companies with values of $50 million to several hundred million dollars. Its most recent purchase, which occurred last year, was Maitland, Florida-based Copilot, which sells technology related to medical payments, patient assistance and education programs and other services.

QHP appears poised for further growth in a fairly recession-resistant business, given that demand for treatments of chronic disease doesn't fade during downturns. Bringing a new drug to market in the United States costs an average of more than $2.5 billion over many years. That frustrates many consumers and policymakers looking for quicker fixes.

The process, though, creates countless opportunities for entrepreneurs that assist the large pharmaceutical companies launching those drugs, QHP officials note.

Added resources enabled QHP to add three partners with lengthy experience in the Triangle business community: Vern Davenport in 2017, Ashton Poole in 2019 and Matt Jenkins, last year.

"The Research Triangle area is one of the top five biotech hubs in the United States and we're not aware of any PE firm in North Carolina that is purposely...