Dispatches from DIA 2013
Parexel CEO: Growth Rate Slowing to Manageable Pace
Here’s a portion of the interview:
OSP: How do you think strategic relationships are growing and how does Parexel stay ahead in a CRO (contract research organization) industry that seems more crowded, especially at the top?
Von Rickenbach: “I’m not sure I agree with that statement [on the crowded landscape]. There is a shift towards partnerships, but there just aren’t that many bonafide, true contestants. And when I say bonafide, I mean in terms of expertise, global footprint, scope, reach, scale, [and all] that is required to be truly a partner for a pharmaceutical company. There are less than a handful of companies” that fit that description of a partner.
“We tend to extend the scope of a work in a partnership once we have it. It may start in Phase II or III area but then the client will ask for more services. In more than 50% of our partnerships, we see some variation of that.”
OSP: You’ve spoken about Parexel’s backlog in the past few months and mentioned its uptick in growth. But David Windley, an analyst with Jefferies, disagreed with this idea that the backlog growth was continuing in a conversation with us last week. How do you reconcile these two views of your backlog?
Von Rickenbach: “Both points are true. Point one is that we had a huge growth in our backlog over the last five years and eventually this growth lead to enormous revenue growth. In recent months we have had a slowdown in backlog growth maybe because we grew revenue to a point where we didn’t feel we wanted to grow faster. We had an organic growth rate approaching 30%. And for our size company, that’s about as fast as you want to drive that car. Our target growth rate is really in the low teens or double digits. We’re not that unsettled to see that come into line.”
OSP: You’ve recently become executive director of ACRO, what are three things you’re looking to focus on?
Von Rickenbach: “Two regulatory developments in Europe are at the top. One is a research regulation which has significant implications for the industry and we want to make sure we can contribute to it as an industry. The second issue is data privacy, which is actually more developed than here in the US, where we’re on the light side. We want to make sure this doesn’t go into overdrive and become an undue burden on industry.
“Increasing requests for information on clinical trials, though it’s more of a client issue, will still affect us [as CROs] to do more work. It’s not that we have the ability to change these regulations but we want to have a voice.
“And then the third area is that we collaborate effectively with various consortia, such as CCTI and Transcelerate. We want to make sure we as ACRO have a voice in consortia trying to make us more efficient. When it comes to Transcelerate, we want to make sure we’re at the table with that group.”
OSP: Are there specific types of companies or geographic regions where you’re looking to make acquisitions?
Von Rickenbach: “We bought Liquent [in January], which has a technology and an outsourcing aspect, which fits into our portfolio. And we just closed a deal in the consulting area with Heron. We’re careful buyers. It could be more for a company’s expertise, therapeutic area, or it could be functional – all of these areas we’re looking at, but it has to be a strategic fit.”