Icon intends to hire 600 to 800 staff to cope with the increased workload and some of these could come from Pfizer. However, facilities, such as the site in Sandwich, UK, are of no interest to Icon.
“Our core business, the running of Phase II-IV clinical trials, is not a facilities business”, Peter Gray, CEO of Icon, told a conference call with analysts. In contrast, Gray said: “We have talked and provided in our agreements with Pfizer, significantly, for the potential for us to take employees.”
Outsourcing-Pharma asked Parexel if it had a similar arrangement with Pfizer. A spokesperson said: “We are working through the details of what will come over and the mechanisms for moving work over.
“The partnership has a transition period of about a year and a half. At this point, we are mainly focused on optimising the governance structure, procedures and workflows to accomplish Pfizer’s goals.” Pfizer failed to answer questions from Outsourcing-Pharma in time for publication.
Waves of work
Icon wants staff to transition from Pfizer but “there will be some challenges”, said Gray, which will mean it will be difficult for employees to move to Icon as their projects transfer to the CRO. As such, Icon is adding external hires to staffing levels which, at current levels of work, exceed demand.
“Our utilisation levels are well down below average in the second quarter”, said Gray, but even more staff will be needed to handle the Pfizer work. Human resources have been put in place and the first of a number of hiring pushes, timed to precede Pfizer transitioning waves of work, has begun.
The Pfizer deal differs from most strategic relationships as it includes the transition of active trials in a series of waves. Gray said Pfizer chose this model to accelerate its vendor consolidation strategy.
Pfizer’s desire to quickly move to a new model means the deal ramps up quicker than Icon expected and this has accelerated hiring. Gray said current staff would only begin work on Pfizer projects after completing their current trials. Moving staff mid-trial would be “provocative” to other clients, said Gray.
Pfizer has divided up its active trials between Icon and Parexel based on which CRO is most suitable for a particular project. New work will follow a similar pattern, with Pfizer allocated projects on a molecule-by-molecule, or indication, basis depending on the strengths of each CRO.
“We’re hoping this relationship will add $100m (€70m), maybe even $200m, in incremental revenues to Icon over the next year or two”, said Gray. In terms of value creation Gray views investing in scale for the Pfizer deal as preferable to making an acquisition that would add similar revenues.
Most of Pfizer’s work is currently done in the US and Europe but Icon views the deal as an opportunity to push more work into emerging markets. “We’ve talked with Pfizer about diversifying the geographic spread even more”, said Gray, which could increase the level of work done in lower cost regions.