Demand for preclinical services up in Q1, says Lab Research
Revenue for the three months ended March 31 increased 8.3 per cent to C$14m (€11m), helping the Laval, Canada-headquartered contract research organisation (CRO) cut its loss to C$2.7m from C$3m in the year-earlier quarter.
The gains were driven by increased contributions from the firm’s businesses in both Canada and Hungary, which grew 7.4 per cent to C$6.3m and 77 per cent to $1.9m respectively, offsetting a 3 per cent drop in revenue from its Danish unit.
CEO Luc Mainville told Outsourcing-pharma that: “Demand for preclinical services during the first quarter of 2010 was healthier than during the first quarter of 2009.”
He went on to say that Lab Research had seen “request for proposal activity” increase 110 per cent in the quarter, with new research contracts from clients in Europe and Japan being some of the highlights.
And, despite stressing that: “the CRO environment can still be considered a difficult one,” Mainville expects that the upswing in preclinical demand will continue.
He predicted that: “Growth in the CRO industry will be mostly fuelled by increased R&D spending from pharmaceutical companies seeking to replenish their proprietary product offerings."
Mainville also suggested the end of Big Pharma merger and acquisition (M&A) activity, coupled with the improvement in biotechnology sector funding levels as the global economy moves out of the downturn, will drive demand.
Recovery of the preclinical contract research sector fits with the pattern observed by some in the CRO industry. Recently, for example, China’s Wuxi PharmaTech and US counterpart PPD both reported an increase in "request for proposal" activity for early-stage research.
Further support for this idea is provided by comments by Charles River Laboratories (CRL) at its last quarterly results presentation.
The US CRO, which is buying Wuxi, suggested that: "strong preclinical bookings for Q1 and positive indications for Q2 [indicate that] drug industry clients are beginning to reinvigorate their research efforts."
However, others in the industry would disagree with Covance, which has recently been scaling back capacity on continued weak preclinical demand, being one of the most obvious examples.
