Clinical, commercial cross-selling fuels record Q2 at Syneos

By Melissa Fassbender

- Last updated on GMT

(Image: Getty/AndreyPopov)
(Image: Getty/AndreyPopov)
Collaboration and cross-selling across Syneos Health's clinical and commercial organizations drove a record quarter marked by new strategic relationships as customers look to increase outsourcing in response to pricing pressures.

On company’s second quarter 2018 earnings call, CEO Alistair Macdonald, said Syneos delivered a record quarter of clinical net awards and revenue.

“These are awards that neither organization could have won before our merger,”​ he said, for which ongoing integration efforts have been progressing well.

INC Research and inVentiv Health merged in 2017​, rebranding in January of this year​ to become Syneos Health.

Total net awards of $1.1bn included multiple new strategic relationships, driven by collaboration and cross-selling across the clinical and commercial organizations, said Macdonald.

The company’s clinical solutions business saw second-quarter net awards of approximately $850m, a record for its clinical business and growth of 18.6% compared to the same period last year.

Macdonald explained, “This strong performance was broad based and fueled by multiple new strategic relationships in both midsize and large pharma,”​ including a new full service, preferred provider relationship with a top 20 pharma company to support its oncology portfolio.

Syneos has been added to several preferred provider engagements in the functional services realm, he noted. The company also was awarded a strategic relationship for which it will hire employees from a customer's therapeutic development group in exchange for a long-term revenue commitment.

Commercial opportunities

Strong commercial awards drove the company’s first quarter sequential growth in commercial revenue since the merger, according to Syneos. The commercial solutions business saw net awards of $205.8m and $528.1m for the three and six months ended June 30, 2018.

“I am particularly pleased with the ongoing integration of our commercial offerings, including growth in our consulting business,”​ Macdonald said on the call. “We are also seeing tremendous commercial traction as we leverage insights and expertise from our clinical group.”

Macdonald noted that the company continues to execute plans to manage its capital structure and related costs. In June, Syneos reduced operations at its Indianapolis, IN-based facility​, citing “shifting customer needs.”

As per the commercial business, he said the macro environment “remains favorable,”​ commenting that new US Food and Drug Administration (FDA) drug approvals are pacing similar to 2017​, which saw the highest level since 1996.

Additionally, Macdonald said customer feedback points to a desire to increase outsourcing in response to pricing pressures.

“The more pressure we feel, the more pressure that comes on to the pharma companies about pricing plays further and further into the model that we've put together,”​ he explained. This, as “it becomes more important to understand what product we'll be developing, what price it will be able to achieve, what reimbursement it will be able to achieve and its position in the market.”

Read more: Commercial Trends Forecast: ‘R&D is transforming into R&D&C’

Michelle Keefe, president of commercial solutions, echoed Macdonald’s comments, noting that pricing pressure represents an opportunity for the commercial business to support market access and launch strategies.

“It's becoming a more and more of … a growth opportunity in our consulting business, which is also leading to integrated communications and deployment strategies with the complexity of some of these products and the hurdles that people have to go through to get these products in hand, due to the control and the regulation around them from the payers,”​ Keefe said.

“It's really creating a lot of opportunity in the commercial segment of our business, and we're having more and more conversations around how we can support our customers in this new environment,”​ she added.

Macdonald said the company’s commercial strategy consulting services represents one of its fastest-growing lines of business.

Data partnerships

Syneos continues to enhance its data strategy to optimize how “data and digitization”​ drive its biopharma acceleration model, Macdonald explained.

“This flexible architecture enables us to link the right data and technology to synthesize rich insights, impacting all phases of drug development and delivery,”​ he said.

Macdonald cited its strategic collaboration with Elligo – announced in June – as “a good example of data and behavioral synthesis.”

“On the data side, we continue to follow the path of partnering,”​ he explained, adding that Syneos is looking for “smart solutions”​ that enable it “to get to the patients and to be able to deliver the trials as fast and as effectively as possible.”

As part of this, Macdonald said it wants to be nimble with data, leveraging cost-effective partnerships with companies that can provide “the right data to answer the right questions.”

“We want to be on the leading edge working with organizations who can bring innovation much more rapidly than we ever could in that space,”​ he said, “so more strategic collaborations, partnerships than raw investment from it.”

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