For 43 years, RTI International has chased government and private research contracts and grants to grow to $265 million in annual revenue and serve as a cornerstone of RTP. Now, the nonprofit organization formerly known as Research Triangle Institute has gone outside of its halls to grow, purchasing a Boston-area health research firm in its first-ever acquisition.
“This is a first for us,” RTI Public Affairs Director Reid Maness says or the recent purchase of Health Economics Research Inc. of Waltham, Mass., for an undisclosed sum. “In general, we are looking for new ways to accomplish our mission, so this acquisition was a natural for us.”
HER, which employs 47 scientists and programmers, conducts health economics and health services research, with a special focus on payment and financing, access and quality of care, cost-effectiveness and program evaluation. RTI has teamed up with the firm numerous times on projects over the years, Maness says.
The acquisition doubles the staff of RTI’s health research programs and increases from one to nine the number of programmers at the organization who specialize in developing databases from complex survey research, he says.
“We weren’t buying contracts here. What was attractive to us was the people,” Maness says. “Clients look for us not only to conduct the research and gather the data but to pull information out of the data that can be used in further studies.”
Continued revenue growth
RTI has been fairly successful and meeting client needs in recent years. The organization’s revenue has soared nearly 80 percent in the past five years, including an 11 percent increase last year despite the onset of a recession.
Many other research and consulting operations have taken it on the chin in the sputtering economy as government agencies and private clients tightened their belts and cut back on contracts. Maness attributes RTI’s continued growth to its diversity. RTI scientists study issues ranging from the environment to health care to technology. Although 85 percent of its revenue comes from the federal government, those contracts and grants are spread among every cabinet-level department.
“Diversity gives us strength in our science and also financially,” he says. “That’s really been the driver for us of late.”
And diversification is why RTI purchased HER and is looking for other ways to grow. “We’re looking outside the box in more ways than this (acquisition),” he says.
Spin-off and licensing potential
Last fall, for example, the organization licensed a chemical compound discovered by RTI scientists to Massachusetts-based Addiction Therapies Inc. for clinical studies as a potential pharmaceutical treatment for cocaine addiction. A year before that, RTI spun out Ziptronix, which specializes in technologies to allow three-dimension semiconductor circuit integration, as a separate for-profit firm.
Maness won’t speculate on whether other technologies within RTI are close to being spun out or whether other acquisitions are in the works, saying only that the organization is looking at every option available to maintain its growth path.
With the HER purchase, RTI now employs about 2,000 people in eight states, Washington, D.C., and three foreign countries.