Fiscal Q2 profits down but Parexel’s late-stage trials biz picks up

By Gareth Macdonald

- Last updated on GMT

Related tags Clinical trial

Parexel says while restructuring charges hit fiscal Q2 profits, gains made by its late-stage trials business are an indication of recovering demand.

Income for the three months ended December 31 was down 34 per cent on the comparable period in fiscal 2009 due to charges of $20.4m (€14.4m) on efforts to revamp facilities and cut staff that the firm has implemented since October​.

At first glance, revenue for the quarter looked more positive, climbing 3.2 per cent to $284.7m. However, when adjusted for the favourable impact of foreign exchange rates the figure was 2 per cent lower than the year-earlier equivalent period.

Despite this, the contract research organisation (CRO) was upbeat about its performance, with CEO Josef Rickenbach suggesting the results “capped a solid and positive finish to a challenging year​,” in a statement released yesterday.

Rickenbach cited the positive impact of Parexel’s the restructuring efforts, new business wins and recovering demand for late-stage clinical trial services as the basis for his opinion.

This idea is supported by gains made by its clinical research services business, which contributed revenue of $221m for the period, up around $21m on the comparable three months in fiscal 2009.

In contrast however, Parexel’s consulting and medical communications and Perceptive Informatics units both saw revenues decline, falling 6.8 per cent to $29.7m and 22 per cent to $33.4m, respectively for the period.

Nevertheless, Rickenbach remained upbeat, predicting “further margin expansion in the coming quarters, as the benefits of restructuring activities and other productivity and efficiency initiatives begin to take hold​.”

He also expects wider industry trends such as the completion of Big Pharma mergers, increased partnering and outsourcing penetration rates and “the heightened focus of our clients on moving promising compounds through [to late-stage trials]”​ will benefit Parexel.

Whether this optimism extends to Parexel’s early-phase drug development operations which, like those of many CROs have struggled in the last 12 months on falling demand, remains to be seen.

Parexel is due to discuss its results at a presentation later today.

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