Pharma's Favorite Crystal Ball Just Got Bought by Private Equity
Private equity firm Altaris Capital Partners is buying Simulations Plus, the AI-driven modeling software used by 19 of the top 20 pharma companies, for $375 million in cash. The deal could reshape how the entire industry accesses its most critical drug development tools.
Nineteen of the top 20 pharma companies in the world use the same software to predict how drugs behave inside the human body. That software just got sold to a private equity firm for $375 million.
Altaris Capital Partners, a healthcare-only PE shop based in New York, announced an all-cash deal to acquire Simulations Plus at $18.50 per share. The plan? Take it private, delist it from Nasdaq, and merge it with another Altaris portfolio company called Chemical Computing Group (CCG). If all goes according to schedule, the deal closes in Q4 2026.
This isn't just another PE buyout. It's a bet that the future of drug development runs through computational modeling, and that owning the tools is more valuable than owning the drugs.
What Simulations Plus Actually Does
If you've never heard of Simulations Plus, that's because it's one of those "invisible infrastructure" companies. Think of it like the accounting software behind every business you use: nobody talks about it, but nothing works without it.
Simulations Plus makes software that helps pharma companies predict how a drug will be absorbed, distributed, metabolized, and eliminated by the body (scientists call this ADMET). Its flagship product, GastroPlus, is a modeling platform that can simulate what happens when you swallow a pill, inject a drug, or inhale a treatment. Another product, ADMET Predictor, uses machine learning to forecast a molecule's safety and behavior before it ever touches a human.
The company also runs a consulting arm and builds disease-specific simulation models for things like drug-induced liver injury. Annual revenue sits around $80 million, which sounds modest until you realize that nearly every major pharma company and "all major regulatory agencies" rely on these tools for drug development and submissions.
Founded in 1996 and headquartered in Lancaster, California, Simulations Plus is one of those rare software companies that managed to become essential without becoming famous.
Get tomorrow's biotech intelligence before your competitors.
Join thousands of biotech professionals who start their day with our free, daily briefing.
A Stock in the Penalty Box
So why did Simulations Plus agree to sell at $18.50?
Because the stock had been getting crushed. Shares were down roughly 50–55% year-to-date before the deal was announced and had fallen nearly 40–48% over the prior six months. The company posted a large GAAP loss (trailing twelve-month net earnings of approximately negative $64–67 million), with operating margins plunging to around negative 80%. That kind of number usually signals a major impairment charge or heavy one-time write-downs, not a business that's falling apart.
Still, the market wasn't in a forgiving mood. Organic revenue growth had slowed. Management lowered guidance. Biopharma clients were pulling back on spending. The stock was trading in the mid-$14s to low-$16s for much of the period before deal rumors surfaced.
Altaris offered a 26% premium to the 60-day volume-weighted average price, which sounds generous until you look at where analysts thought the stock should be. William Blair had the stock rated Outperform. Multiple fair-value models pegged intrinsic value in the low-to-mid $20s. One estimate from Simply Wall St put the discounted cash-flow value at $22.72.
In other words, Altaris is buying during a sale. The deal price of $18.50 implies roughly 14.7x estimated FY2027 adjusted EBITDA, according to William Blair. That's reasonable for a niche software company, but it's well below the 25–35x multiples the stock commanded when growth was stronger.
The Bigger Play: Building a Computational R&D Empire
The deal doesn't exist in a vacuum. Altaris plans to combine Simulations Plus with Chemical Computing Group, which makes molecular design software for pharma and chemical companies. Think of CCG as the tool that helps you design a molecule from scratch, while Simulations Plus tells you what happens after you've built it.
Together, they'd form a vertically integrated computational drug development stack: molecule design on one end, ADMET prediction, PK/PD modeling, and regulatory-grade simulation on the other. It's the difference between selling someone a hammer and selling them the entire toolkit.
Simulations Plus has also announced a partnership with Nvidia to bring GPU-accelerated computing and AI into its simulation workflows. Faster chips mean faster simulations, which means pharma companies can test more scenarios in less time. Under PE ownership, the company can invest aggressively in that roadmap without worrying about quarterly earnings calls.
Altaris manages roughly $10 billion in assets and has built its reputation on carve-outs and complex deals in healthcare. Its playbook typically involves taking profitable, niche healthcare businesses, investing heavily, and scaling them. Past targets include specialty pharma companies, medical device manufacturers, and digital health platforms (like the $518 million Sharecare acquisition). The firm targets $75–750 million in equity per platform deal and aims for around 20% net returns.
What This Means for Pharma
For the 280-plus companies that use Simulations Plus software, this deal could go one of two ways.
The optimistic case: a better-capitalized owner accelerates product development, integrates CCG's molecular design tools with SLP's modeling suite, and delivers a unified platform that makes drug development faster and cheaper. Bigger R&D budgets, no public-market distractions, and Nvidia's GPUs humming in the background.
The cautious case: PE ownership eventually means tighter monetization. Bundled pricing. Less flexibility for smaller biotechs that can't afford enterprise contracts. The "walled garden" risk, where an open ecosystem gradually closes to maximize revenue extraction.
For competitors in computational modeling and AI-driven drug design, the bar just got higher. You're now competing against a PE-backed, Nvidia-aligned, integrated platform that covers everything from molecule design to regulatory submission. That's a lot of ground to defend against.
The Bigger Picture
This deal fits a pattern. Private equity has been circling pharma software with increasing intensity. Vista Equity took Model N private for $1.25 billion in 2024. Bain Capital grabbed HealthEdge. Clearlake took a majority stake in ModMed. The thesis is consistent: pharma's digital infrastructure is undervalued, sticky, and ripe for consolidation.
Pure-play AI drug discovery companies (the Recursions and Exscientias of the world) still attract mostly venture capital and strategic buyers. They're too early, too cash-hungry, and too risky for the PE playbook. But the "picks and shovels" layer, the software that powers R&D behind the scenes, fits perfectly. Recurring revenue. High switching costs. Deep customer lock-in.
Simulations Plus is exactly that kind of asset. And at $375 million, Altaris might have just gotten the deal of the year in pharma AI. William Blair downgraded the stock to Market Perform after the announcement; not because the business is bad, but because the upside now belongs to Altaris.
The co-founder, Dr. Walter Woltosz, signed a voting agreement to support the deal. The board approved it unanimously. Morgan Stanley is advising Simulations Plus; Truist Securities and J.P. Morgan are advising Altaris.
All that's left is a shareholder vote and regulatory approval. If it passes, one of pharma's most essential software companies disappears from public markets, and the real question becomes: what does Altaris build next?
Deals & M&A
5 min read
Novo Nordisk Just Bet $812M That Obesity's Future Isn't GLP-1
Novo Nordisk just dropped $812 million on a tiny AI-driven startup to find obesity drugs that have nothing to do with GLP-1. The deal with Deep Apple Therapeutics signals that even the king of Ozempic and Wegovy thinks the next era of weight loss will look very different.
