Icon cuts back sales forecasts for ‘08

By Phil Taylor

- Last updated on GMT

Related tags: Icon, Revenue

Ireland’s Icon plc has scaled back its revenue forecasts for 2008 but says it expects 2009 profits to come in higher than previous guidance.

Icon said it now expects 2008 revenues to come in at $862m to $865m for the year ended December 31, 2008, a “modest reduction​” on previous guidance that the company blamed on the strength of the dollar in recent months.

The rising dollar has boosted Icon’s profit margins but reduced its booked sales, said the company. It has increased its earnings per share guidance for 2008 to $1,27-$1.29.

Up to the end of September the company had recorded net business wins of a little over a billion dollars, hiking the backlog to $1.7bn at the end of the third quarter.

There was a deceleration in the fourth quarter, according to Icon executives on a conference call, as backlog conversion slowed down as a result of the increasing complexity of clinical studies, and while the signals from the marketplace remain healthy that scenario may extend into 2009, according to Icon’s CEO Peter Gray.

Looking back on 2008, Gray said Icon had fulfilled a key objective in making its business more international, opening new offices in Madrid, Bogota, Bucharest, Kiev, Edinburgh and New Delhi, and a new central lab in Bangalore, India.

The company also completed new acquisitions during the year, including Phase I trial specialist HCD based in Texas, US, Prevalere Life Sciences, a bioanalysis lab in New York, and the remaining 30 per cent of Beacon Bioscience, an imaging specialist that has now been renamed Icon Medical Imaging.

Its been an active year for us in terms of developing the business​,” said Gray on a conference call. He pointed to the concerted shift towards wide-ranging, strategic deals between CROs and their clients – such as the oft-cited 10-year Lilly/Covance deal announced in August - and noted that this shift is an endorsement of Icon’s ambitious expansion plans.

Companies are questioning the way they have been using outsourcing, and coming to the realisation that they have not been as efficient as they could have been​,” commented Gray.

They have had a high overhead internally in managing outsourcing, both in terms of the RFP [request for proposal] side and the oversight of the CRO post-award.​”

These strategic deals allow companies to rely on the CRO more and less on micromanagement of the project, he added.

Looking to the coming year, Gray said net revenue is expected to be in the range of $930m to $980m, representing growth of 8 to 13 per cent, and the company enters the year with a healthy backlog of around $1.7bn-$1.8bn.

However, we don’t expect the spectacular growth that has been seen in the market in the last couple of years​,” he stressed.

Icon is predicting profits in 2009 will increase to $1.40-$1.52 per share, or a 9 to 18 per cent increase over 2008.

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