Finance LabCorp just signed a billion-dollar deal for a healthcare company you've probably never heard of (Q, ICLR, CRL, INCR, LH)

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Contract research organizations, to which pharmaceutical companies outsource research and development, are the subject of a lot of acquisition activity.

A researcher prepares medicine at a laboratory in Nanjing University in Nanjing, Jiangsu province, April 29, 2011. play

A researcher prepares medicine at a laboratory in Nanjing University in Nanjing, Jiangsu province, April 29, 2011.

(Aly Song / Reuters)
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Lab-testing giant LabCorp has picked up contract-research organization Chiltern for $1.2 billion.

Chiltern works with drugmakers to take on some of the science that companies have to carry out to get drugs approved, like discovering drug targets and running clinical trials on behalf of pharmaceutical companies.

For example, say you need to run a clinical trial for a drug you're working on but don't want to invest in hiring all the folks to run the clinical trial. You could work with a contract-research organization, or CRO, which can set that up for you and recruit patients for a certain price.

As drug companies continue to look for ways to trim research-and-development costs, CROs have become more popular. That activity has made a lot of room for mergers and acquisitions, even at a time when drugmakers are in a bit of a dealmaking lull. According to Bloomberg, M&A spending in the CRO industry was $24 billion in 2016. So far this year, spending on deals has totaled $14.2 billion, including the LabCorp acquisition.

LabCorp is no stranger to CROs. In 2015, it acquired Covance in a $6.2 billion deal. And in May, Chiltern picked up Japanese CRO Integrated Development Associates.

Many of these CROs are getting picked up by private equity, which signals that investors expect the companies to grow over the next decade. Pamplona Capital Management, Carlyle Group, and GTCR have all struck big deals recently.

Stocks of the companies that are public are up by more than 25% over the past year, signaling Wall Street investors are betting on the companies, too.

"We are at the beginning of this process," KPMG principal Paul Saias told Bloomberg.

Here are some of the other notable CRO deals from the past few years.

Very few of the top 10 CROs have stayed out of the dealmaking frenzy. One holdout still is Pharmaceutical Product Development, whose majority is owned by Carlyle Group, which was also behind taking Albany Molecular private.