Icon continues investment spree with China buy

BeijingWits employs 100 clinical research staff at sites in Beijing, Shanghai, Chengdu, Guangzhou, Wuhan and Hong Kong and is, according to Icon, a leading advocate of ICH GCP in China.

Icon’s recently appointed CEO Ciaran Murray​ said: “The acquisition of BeijingWits is a further step in our on-going expansion in China and the greater Asia-Pacific region.​

Murray ​added that: “An increasing number of our global clients are looking to undertake research in China and local companies are also placing more emphasis on R&D, which has resulted in growing demand for local clinical trial expertise.”​

Investment spree​

The BeijingWits investment – financial details of which were not disclosed – fits with Icon’s recent efforts to boost capacity in preparation for an anticipated upswing in work from key Big Pharma​ clients.

In July, for example, the Dublin-headquartered contract research organisation (CRO) said it planned to hire between 600 and 800 extra staff to cope with increasing demand from strategic partner Pfizer​ – and had boosted its workforce by 500 at the end of Q3​.

Simon Holmes, Vice President, Group Marketing and Market Development at Icon, could not say if BeijingWits will be involved in the firm's work with Pfizer, telling Outsourcing-pharma.com that: "Due to client confidentiality we cannot comment on the specific plans that our clients have for geographical regions.​

He did say, however, that: "We have spoken openly about our hiring plans which have been undertaken to ensure that we have enough resources to facilitate the transfer of ongoing trials from Pfizer whilst maintaining our high standards of service to all our other customers​."

Holmes also said that: "BeijingWits is a profitable company and so will make a positive contribution from closing, however the size of the company means the financial impact of this acquisition is not material to our overall financials."​

Investor reponse​

Despite this assurance investor response to the BeijingWits acquisition is still difficult to predict.

In recent months some observers have begun to suggest that margins shrunk by Icon’s investment activity may take longer to recover than previously forecast.

Jefferies & Co analyst David Windley said: “Management’s expectations for operating margin have tempered slightly with a mid-term goal of 12 per cent. Management had discussed a 12 to 14 per cent goal and still views this as the long term goal​,” adding that “We are currently modelling peak 2013 margin of 9 per cent​.”

This is in keeping with comments by made in November by Sandy Draper, equity analyst at Raymond James​, who said hiring had meant that “profitability [at Icon]…took a step lower​.”