Kendle committed to early stage, says incoming CEO

07-Mar-2011 - Last updated on 07-Mar-2011 at 09:32 GMT

The incoming Kendle CEO has stressed commitment to early stage and said dramatic changes in the short- to medium-term are unlikely.

Regulatory difficulties prompted Kendle to close its Phase I unit in Utrecht, the Netherlands but, with the early stage strategic review completed, the company is committed to its two remaining sites.

Development and growth of early stage units in Toronto, Canada and Morgantown, West Virginia, US is one of a number of tasks facing Stephen Cutler, who takes over as CEO of Kendle on May 1.

“We’re on the right track”, said Cutler in a conference call with investors. As such, Cutler has no plans to implement dramatic changes in the short- to medium-term choosing instead to build on work initiated by the previous leadership.

Cutler expects continuation of this strategy to result in a “modest upturn” in revenues in 2011 but stressed slow conversion of backlog to revenues and continued volatility could impact on results.

Volatility is expected to continue in the mid- to long-term, said Cutler, and is a symptom of shifts in the outsourcing sector. Outsourcing earlier and contracting out risky work traditionally kept in-house are factors responsible for the continued volatility and cancellations, said Cutler.

Despite volatility Kendle remains optimistic about the health of the contract research sector. Candace Kendle, the outgoing CEO, expects the late stage market to grow at eight to 10 per cent over the next three years. Growth will be underpinned by increased penetration.

Working with Pfizer

Overall big pharma market trends of increased outsourcing penetration offsetting flat research and development (R&D) spend are, to some extent, reflected at Pfizer, an important Kendle client.

Pfizer is cutting its R&D budget but Kendle expects little change in revenues from the company because of increased commitment to outsourcing. In fact, there may be an uptick in business in the long-term, said Cutler.

Kendle has worked with Pfizer as functional service provider (FSP) but it is possible the big pharma may choose to change its approach to outsourcing. If this happens Kendle is well placed, said Cutler.

Following release of fourth quarter financial results and the accompanying conference call shares in Kendle closed the day down 15 per cent at $10.29.