Big preclinical CROs stuck in tox time warp says upbeat Cyprotex CEO

The UK firm – which will publish its preliminary 2011 results in March – expects revenues to be 30 per cent higher than in 2010 following a strong second half performance from its UK and US sites in both ADME and toxicity services due - in part - to demand from ‘strategic' pharma customers.

CEO Tony Baxter told Outsourcing-pharma.com that while the first six months of 2011 saw growth for Cyprotex’ bespoke assay business and higher demand for academics and non-industry group the second six months of the year were "characterised by the return of bigger pharma and biotech players.”​

“We signed bigger contracts with bigger customers​“ Baxter continued, adding that this resurgent demand mainly came from European Pharmas Cyprotex has worked with before.

Big CRO tox time warp​

Cyprotex’ view of the pharma toxicology and ADME market differs from others in the sector, notably Covance whose CEO Jo Herring told attendees at JP Morgan’s Healthcare Conference​ just this week that low industry demand for tox was a factor in the underperformance of his firm’s early-phase business.

The reason for this difference in perception – according to Baxter – is that, increasingly, pharmaceutical and biotechnology customers are favouring service providers that offer predictive cellular toxicity assays.

“Bigger CROs are stuck in the time warp of traditional toxicology testing – 28 day studies in rats etc. – but the drug industry has gone for more predictive cellular models like cardio tox and hepatotox, and Cyprotex has been a beneficiary of this​.”

These benefits have been twofold – Baxter continued – suggesting that Pharma customers attracted by Cyprotex’ cellular preclinical toxicity testing offering may have decided to source ADME from the company, rather than competitors that take a more traditional approach.

Strategic partnering perils​

Cyprotex’ optimism about the preclinical services market is in marked contrast with sentiments it expressed last year when it said that the unexpected loss of its largest customer had negatively impacted on its H1 income​.

However, while demand from strategic customers seems to increasing, Baxter is still wary of the benefits of over reliance on any particular client.

“Strategic contracts are good at giving you a leap forward, but you have to backfill with more sustainable work in case that contract goes away​.”