Parexel CEO: ‘We’re Undergoing Significant Change’

Parexel CEO: ‘We’re Undergoing Significant Change’

May 31st, 2011 // 12:41 pm @

Yesterday, Pfizer reached an outsourcing deal with two large clinical research organizations – Parexel International and Icon. The move comes not long after the big drugmaker announced plans to close or shift various R&D operations and slash 3,500 jobs in order to save $1.5 billion. Such deals, of course, are not new as large drugmakers finetune the cost of capital. This also poses challenges for CROs, however. Parexel is cutting some of its Phase One capacity and eliminating jobs . We spent a few minutes yesterday chatting with Parexel ceo Josef von Rickenbach about these developments. And here’s what he had to say…

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On the Pfizer deal: It basically entails clinical development work and associated tasks around the world. It’s pretty much across the board, but a lot has not yet been decided exactly. Over next several periods, we’ll work on those kinds of details….Our understanding is that it’s more later stage. That’s where more of the activity is…We have similar deals with other drugmakers…There is Glaxo, BMS, Merck, plus others others that are unannounced…But the companies are not taking a cookie-cutter approach (to their decisions about outsourcing and working with CROs)…Pfizer, of course, has already outsourced a lot…For them, it’s mainly a redirecting of their outsourcing to two providers versus starting outsourcing in the first place…But it’s a global deal…I expect the work we will do will reflect Pfizer work around the world, both global and domestic.

On the recent Parexel restructuring: The restructuring we announced is focused on early phases. The business is undergoing significant changes. The healthy volunteer – the classic pharmacology business, which is typical Phase One as we know it, has declined. That was the majority of what we did in the past. Where the growth is and where the portfolio has grown is in patients…We’re taking down 25 or so percent of our capacity in our Phase One units. But at same time, the intent is in initiating more growth in the patient area. I think what prompted the change is the portfolio profile…And companies don’t necessarily have a presumption of success. In the past, they basically went at development of every compound as if it would succeed…and do all tests possible. Increasingly, companies are making their decisions understanding that the majority of products that will get into the pipeline will fail. Therefore, you don’t want to do tests that are unnecessary. The result, basically, was a decrease in demand for certain pharmacology tests, but may effect pre-clinical even more. And the financial crisis put a lot of smaller companies under pressure and so they didn’t have money anymore to take those compounds into man.

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