Oracle Set to Acquire ClearTrial - Analyst Blog


Oracle Corp. ( ORCL ) recently announced its intention of acquiring clinical trial operations ( CTO ) software developer ClearTrial. However, terms of the deal were not disclosed. The acquisition is expected to be completed in the first half of 2012.

Based in Chicago, Illinois, ClearTrial develops cloud-based CTO software that helps biopharmaceutical and medical companies to run clinical trials of new drugs. ClearTrial will be integrated into Oracle's cloud based Health Sciences Suite, which includes applications such as Oracle LabPass and IRT.

Clinical trials over the last few years have become a costly affair and results in time are of pristine importance not only for the new drug manufactures but also for the sponsors and investors associated with the whole process.

By acquiring ClearTrial, Oracle is now in a position to offer a complete suite of clinical trial management. The inclusion of ClearTrial not only accelerates the entire planning process but also improves budgeting accuracy and ensures transparency in timeliness to all stakeholders involved in the clinical trial process.

ClearTrial is Oracle's third important acquisition in the field of health sciences after the company grabbed Phase Forward in 2010 and Relsys in 2009. The recent acquisition reflects Oracle's policy of providing end-to-end medical solutions encompassing drug invention, manufacturing, distribution, and health record database going forward.

We believe that the acquisition will not only diversify Oracle's revenue base but will also significantly enhance customer base going forward. ClearTrial boasts a significant clientele, which includes some of the world's largest biopharmaceutical companies including AstraZeneca ( AZN ) , Sanofi and Genentech.

We believe that Oracle will continue to pursue strategic acquisitions in the health care sector, which is expected to grow at a rapid pace due to the aging demography. We believe that the sector possesses strong margin growth potential, which will be beneficial for Oracle, as it will offset diminishing margin growth from its new software licenses and sluggish hardware sales going forward.

However, Oracle faces significant integration risks due to the rapid pace of acquisitions within a short span of time, in our view. We also believe increasing competition in most of its markets will hurt profitability going forward.

We remain Neutral on Oracle over the long term (6-12 months). Currently, Oracle has a Zacks #2 Rank, which implies a Buy rating on a short-term basis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AZN , CTO , ORCL

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