Pike told investors in the company’s quarterly conference call on Thursday that larger CROs continue to capture share from the smaller ones.
“We now have over 1,000 PhDs…I just don't know how the smaller CROs are going to compete. And the model that we deliver under is becoming more global, and we're able to lower the cost per customers... And so in that world, I just don't know how smaller CROs are really going to compete over time because they just won't have the resources to make the investments required or have the globality that's required to deliver,” Pike said.
The pronouncement comes as Quintiles brought in a significant amount of new business in Q4, generating 22.2% year-over-year growth. A lot of that growth came from the company’s Product Development division, which booked net new business totaling $1.23bn, representing 28% growth compared to the same period last year.
Pike told investors that there was a chunk of renewals in this quarter, and that it had “a really strong quarter in terms of what we would call project-based revenue wins.” CFO Kevin Gordon added that the company is seeing strength around its real-world, late phase business.
More specifically, Pike noted that the company has “a tremendous amount of business in the oncology area. And when you have business in that area, in -- especially in the Phase II trials, they'll have a tendency to be more US-based.”
The company’s book-to-bill ratio for the year finished at 1.41, which is Quintiles’ highest in the past six years.
Pike also mentioned the shift he’s seeing in terms of the way that larger pharma companies develop drugs, which he says bodes well for the outsourcing industry in general.“If you think about the number of large pharmaceutical firms who have now said that they're going to use small biotech or they're going to use academic institutions as a key part of their innovation, what it means is, essentially, they're variabilizing their model a bit. And as they variabilize how they find their compounds, they also have the opportunity to variabilize how they develop those compounds. And so I think that bodes well for the future that they need more flexibility,” Pike said.
Analysts sounded upbeat on the Quintiles earnings, as well. Citi Research analyst Garen Sarafian said: "Strong new bookings across geographies and client types reflects the high quality of Quintiles backlog and the sustainability of its industry leading book-to-bill."