Contract sales sector “shrunk” in 2011, PDI CEO says

By Nick Taylor

- Last updated on GMT

Related tags Contract sales Marketing Pdi

Contract sales sector “shrunk” in 2011, PDI CEO says
The CEO of PDI said the contract sales market has “shrunk” over the past few quarters as the flow of business awards has dried up.

PDI blamed its weak start to the year on business awards across the contract sales industry slowing to a halt at the end of fiscal 2011. The slow flow of business at the turn of the year followed several quarters of weak demand.

In general the market has shrunk over the last, let’s say, three to four quarters​”, Nancy Lurker, CEO of PDI, told investors in the first quarter conference call. Lurker was defending the performance at PDI after a questioner said the first quarter results were “awful​”.

Revenues at PDI were below expectations but, Lurker said, the industry as a whole has slowed down and competitors in the contract sales sector are also taking hits. The weakness likely stems from a phase of downsizing at biopharma firms and the need to get past the period of peak patent losses.

Management comments suggest that ongoing budget concerns, including accelerated layoffs, related to patent expirations within pharma have continued to slow the decision-making process​”, John Kreger, equity analyst at William Blair, wrote.

Lurker said many biopharma companies are through most of this process and are now looking to ink contract sales deals. The flow of business is further buoyed by the uptick in drug approvals at the US Food and Drug Administration (FDA).

PDI hopes more and more of the owners of these compounds will turn to contract sales to support their commercialisation efforts. Lurker said close to 10 per cent of the 60,000 sales representatives in the US work at contract service providers at the moment but PDI expects penetration will increase.

Jeffrey Smith, chief financial officer at PDI, said outsourcing penetration can reach 20 per cent in the next five years. Beyond this 30 per cent, which Lurker said is the current level in Europe, is a realistic target in the US.

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