Business booms for PPD

By Kirsty Barnes

- Last updated on GMT

Related tags Ppd Pharmacology Contract research organization

As global contract research spending remains robust, business is
booming for Pharmaceutical Product Development (PPD) as the US firm
reported a surge in sales, profits and new business for its second
quarter 2006.

The company reported a pre-tax profit of $49m (€38m) - a 68 per cent surge over the same period in 2005, however, the profit jump was largely attributed to an 89 per cent drop in R&D spending to $1.3m after the July 2005 transference of the rights to SYR-322 - the dipeptidyl peptidase IV (DPP4) inhibitor diabetes drug PPD was developing - to Takeda Pharmaceutical.

PPD's operating profit was up 27 per cent to $141m and its revenues were also up 24 per cent to $283m, with both the firm's Development and Discovery Sciences segments displaying an equal amount of growth, however, despite the increases, PPD's profit margin remained firmly stuck.

The biotech industry is continuing to boom and backlog and revenue in the contract research organisation (CRO) sector is continuing to grow above R&D growth, signalling that these biotech companies are outsourcing more and more to companies like PPD.

PPD's new business authorisations for the second quarter of 2006 totalled $475.9m. One such deal involved a new agreement with PDL BioPharma to perform comprehensive molecular profiling to discover biomarkers.

The firm also grew its new business bookings by 34.5 per cent year-over-year for the quarter, resulting in a backlog of more than $2bn.

"We believe our second quarter operating results demonstrate continued strength in the market as well as PPD's ability to perform well across the continuum of global drug development markets and service segments,"​ said Fred Eshelman, CEO of PPD.

"We are looking at more very large opportunities than we have ever seen in the past."

PPD's area of focus is complex global clinical trials that require a huge amount of infrastructure and capacity.

"In this area it is tough for other CROs to compete with us, giving us some degree of price leverage," Steve Smith, PPD investor relations told Outsourcing-Pharma.com.

"Only the big CROs, Quintiles and Covance, are able to compete with us on this global level."

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