ClinPhone accounts give Parexel a hangover
pharmafile | August 18, 2009 | News story | Research and Development | Clinphone
Accounting errors at recently-acquired ClinPhone pegged back Parexel's operating profits in its latest quarterly reports, and it will be some months before the impact peters out, according to the firm's chief executive Josef von Rickenbach.
Service revenues came in at $247.5 million in the fourth quarter, down 9%, while operating profit fell 28% to $19.5 million.
Currency factors and weaker demand for services also played a part in holding back Parexel's performance, but analysts have focused on the accounting problems, which relate to the early recognition of ClinPhone revenues.
It has emerged that revenues from projects started up ahead of ClinPhone's acquisition in August 2008 were recorded after the purchase took place, and that some revenues were recorded during the start-up phase of projects that should have been deferred to the hosting phase.
Von Rickenbach admitted the accounting errors at ClinPhone were spectacularly disappointing, but insisted they did not indicate any fundamentals problems at Perceptive Informatics, Parexel's eClinical business unit.
ClinPhones interactive voice response (IVR) platform Synapse was a key reason for Parexel's purchase of the business, as Perceptive's own IVR technology Aladdin was starting to show its age. Von Rickenbach stressed that the expanded portfolio of products and services that ClinPhone offers has helped to solidify our leadership position in the eClinical space.
The business had excellent traction in the marketplace this past quarter and actually achieved record new business levels, he said.
Perceptive Informatics achieved revenues of $125 million for the full-year, up 40%, while Parexel's Clinical Research Services (CRS) unit saw sales advance 7% to $804 million. On the downside, its Consulting and Medical Communications Services (PCMS) unit saw a 6% decline to $122 million.
"Over the past few months, we have experienced an increase in the value and volume of opportunities that are in the proposal pipeline, which leads us to expect a gradual improvement in new business activity over the second half of calendar year 2009," said von Rickenbach.
"Although the growth rate of biopharma R&D spend has moderated, the rate of outsourcing amongst our clients continues to be robust and is expected to increase," he added.
