PRA embarks on major restructure as profits dive

By Emilie Reymond

- Last updated on GMT

Related tags Cent Clinical research Pra

PRA has announced the closure of two facilities as part of a major
restructure as Q4 profits took a 55 per cent dive.

PRA said it will close down two of its North American facilities - located in Eatontown, New Jersey and Ottawa, Canada - as a result of the restructuring. The firm said this move was aimed at boosting its operating profits, and was driven by the desire of its managers and lead clinical research associates (CRAs) to work from home. "There is a growing trend for higher level clinical researchers to be home-based. This is due to the fact that they don't need to spend a lot of time in a centralised office a they tend to travel a lot and spend high amounts of time with clients,"​ John Lewis, PRA's spokesperson told He added that reducing the number of offices would be beneficial for the company in terms of cost savings. The company also said it expected no overall reduction in staff. Meanwhile, PRA has decided to revamp its business structure to focus on three basic service areas: Early Development, Product Registration, and Scientific & Medical Affairs, in a bid to make the business more efficient and profitable in the long-term. "It is a practical simplification of our structure that will allow us to focus on our core competencies, on areas where we have the highest level of expertise,"​ said Lewis. He said that his company has picked three areas with higher growth rates - the Early Development unit is expected to grow 20 per cent annually, while the Production Registration business and the Scientific & Medical Affairs segment are hoped to achieve 12 per cent and 20 per cent growth respectively. The decision comes at a time when PRA reported a 55 per cent dive in operating income for the quarter ending 31 December 2006 to $6.9m, from $12.7m in the year-ago quarter. Its income before tax also fell 55 per cent to $6.9m in the same period. As a result, operating margins also suffered and made a dip from a healthy 16.7 per cent in the fourth quarter of 2005 to 7.1 per cent in the same quarter this year. Lewis said this poor performance was partly due to a decline in sales in the company's Product Registration segment - which represents almost 80 per cent of the firm's revenue - which was driven by a high number of unexpected product cancellations. "Because a big part of our business comes from biotech clients, contracts tend to be less predictable" said Lewis, although this has also been pinpointed as the reason for the disappointing results the company recorded in the previous quarter. Meanwhile, the charge related with the restructuring is expected to be about $9m (€7.5m), and likely to be expensed in the first two quarters of 2007, with annual savings expected to be about $4m, the contract research organisation (CRO) said. On a more positive note, PRA recorded sales up to $92.5m - a 21 per cent jump from the compared quarter - despite a 69 per cent fall in new business awards. The company attributed this plunge to the staffing issues it experienced last year as it implemented a different approach to selling within its sales team. "It took us a lot of time to ramp up our sales teams, get new staff and train people who were new to PRA. We now have 11 teams who are focusing on our core therapeutic areas,"​ said Lewis. Looking forward, the company said that although 2007 is a "rebuilding year", it is optimistic about achieving better growth in 2008 and beyond.

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