PPD cuts jobs in face of falling demand

By Gareth Macdonald

- Last updated on GMT

Related tags: Contract research organization, North america

US CRO PPD has laid off around 80 people at its HQ in Wilmington, North Carolina and may cut another 200 jobs from its North American workforce, according to local media reports.

PPD spokesperson Louise Caudle told the StarNews​ website that although the firm has a backlog of global orders, demand for contract research in North America has been lower than expected.

In common with many US contract research organisations (CROs), PPD has been hurt by falling levels of pharmaceutical and biotechnology industry demand for clinical trial projects this year.

In April, PPD posted lower than expected Q1 revenues citing an “unprecedented level” of contract cancellations, totalling some $215m (€166m), as the reason for the shortfall.

It also cut its 2009 earnings forecast, falling into step with rivals Covance and Kendle International both of which issued revised guidance.

The following month, PPD suffered another blow when the US Food and Drug Administration (FDA) knocked back the diabetes drug alogliptin, denying the CRO an expected $27m (€17.7m) milestone payment from development partner Takeda.

A potential upside from the alogliptin decision is the FDA’s request for an additional clinical trial which, given the CRO’s existing relationship with Takeda, is almost certain to provide additional business for PPD.

Kannapolis withdrawal

Yesterday’s job cuts also provide some additional context for last month’s decision not to move into a new 40,000 sq ft building in North Carolina’s Kannapolis biotech campus.

While at the time PPD said that a series of construction delays had motivated its withdrawal from the lease agreement, it seems unlikely that two decisions were entirely unconnected.

The job cuts make it likely that PPD’s second quarter financial report, which is scheduled for July 21, will attract considerable attention from employees, investors and analysts alike.

The move may also indicate that PPD’s focus, for the medium term at least, will be on following up its recent entry into the Japanese and Central and Eastern European (CEE) markets with further global expansion.

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