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Long-term relationship key to Icon’s Shire deal

By Gareth Macdonald , 10-Jan-2012
Last updated on 06-Aug-2012 at 13:42 GMT

A prior relationship rather than price was the most significant factor in helping Icon win its strategic deal with Shire according to an analyst who says such a trend is good for the sector.

In an investment note published shortly after the deal was announced Citigroup analyst Garen Sarafian suggested that Icon had won its contract to provide Shire with Phase II to IV trial and central laboratory services “due to its long-standing relationship" with the UK drugmaker.

As such, pricing likely did not play a lead role [which] in our view is a positive for the CRO industry overall as it builds momentum after the 2009 downturn,” Sarafian continued, adding that “we expect a similar situation occurred with the other selected private CRO.”

The other contract research organisation (CRO) in question is North Carolina-based PRA International according to an Icon spokeswoman contacted by Outsourcing-pharma.com .

Sarafian also speculated that Icon could earn between $40m and $60m from the agreement with Shire, which he suggested will run for at least five years if it is anything like the Irish CRO’s deal with Pfizer .

However, while Icon and PRA will do most of Shire’s clinical trial and lab work, there may still be opportunities for other large CROs to work with the drugmaker according to Sarafian.

We also note that other Shire segments were not included in this agreement such as Shire’s Genetics or Regenerative Medicines business. This may offer similar future opportunities for large CROs as the outsourcing of drug development continues.”

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