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Dispatches from DIA

Parexel sees calming year after ‘hyper’ growth, CEO says

By Zachary Brennan , 18-Jun-2014
Last updated on 18-Jun-2014 at 10:42 GMT

Double digit growth comes on the heels of major growth for the CRO
Double digit growth comes on the heels of major growth for the CRO

A year after CRO Parexel saw what its CEO called “hyper growth,” the Massachusetts-based company is seeing revenue gains return to relatively normal levels.

Von Rickenbach explained to Outsourcing-Pharma.com at the 50th annual DIA conference in San Diego that in FY 2013 the company experienced “well over 20%” growth,” but so far this year that has stabilized to “more double digit growth and my expectation is that from a revenue perspective, we’ll stay in this territory for a while.”

Despite some prior expectations that outsourcing would see dramatic increases with the expected onset of megamergers in the big pharma industry, that growth also does not seem to be materializing.

So far people have talked about a lot of megamergers but not nearly so many have closed – there’s been a lot of noise. Some have happened but I’m not sure there’s been this big wave that everyone’s talked about,” von Rickenbach told us. “I’m not sure that this will play out.”

Parexel M&A

The past year also has seen some action in acquisitions from Parexel – with the purchases of Liquent for $72m and the purchase of consulting firm Heron .

Von Rickenbach said the integration of the companies with Parexel is “going well,” explaining that - -Liquent, which has “the leading system” for RIM (regulatory information management) and is helping to form “the nucleus of new growth opportunities” for the CRO.

And then with Heron, which is focusing on market access, reimbursement and commercialization – it’s essentially an expertise play. We were in that business but not as strong as we wanted to be – so now we have a strong offering in that area, which is important for our clients because in today’s world a drug needs to show basic evidence that you deserve reimbursement, and that’s what this group focuses on – to help clients show up with that evidence,” von Rickenbach said.

He added that as far as M&A is concerned moving forward, “it’ll be more of the same. Generally we’re looking to relatively smaller companies,” he said.

Early Phase Research

Some in the industry, such as Covance’s CFO , have indicated recently that there seems to be some signs of a revival in early phase research.

For von Rickenbach, however, the dynamics of the market are more complex.

If you just look at the number of trials in early phase that have been going on, I don’t think it ever actually went down but the mix has changed.”

He added: “If you asked this question or looked at the patterns 10 years ago – the vast majority of early phase work was done on healthy volunteers in a Phase I unit. And one of the big changes that has started to happen is that more and more of that work is being done directly in patients, even in early phases. The question is what changed: And what changed is number one oncology: if you were refractory as a patient, of course you want to be in a Phase I trial, it’s almost unethical to not be.”

He added that there have been considerable improvements in innovation in the global pipeline, with more products getting priority tracked and “much more growth in patient studies” earlier.

There’s a big shift that’s happening,” he said, but “if you ask someone running a Phase I unit, it’s probably still not a lot better but the overall dynamic doesn’t tell the whole story.”

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