Kendle operating income slumps
pharmafile | May 13, 2010 | News story | Research and Development |Â Â CRO, KendleÂ
US contract research organisation Kendle posted a 17% drop in revenues in the first quarter of 2010 to $90 million, which contributed to a near-halving of its operating profit year-on-year.
Operating profit was down 48% to $4.3 million, and was offset by a cost-reduction programme at the company which helped it post a 35% rise in net profit to $1.2 million.
Chief executive Candace Kendle believes that there are signs of a recovery however. “In the last few months there has been more clinical development outsourcing activity among both large and small biopharmaceutical customers,” she said.
In light of the heightened scrutiny of drug safety by regulators, particularly in the US, larger companies are increasingly looking for better assurances on quality as well as delivery timing and cost from their outsourcing partners, particularly in emerging markets, she added.
“We believe this elevated concern will give us opportunities … including rescue opportunities in the short-term,” said Dr Kendle.
New business awards for the first quarter came in at $89 million, starting slowly but accelerating as the quarter progressed and continuing into the second quarter with $50 million of awards in the month of April alone.
“This is consistent with what other CROs have seen,” said Dr Kendle.
Project cancellations have been the scourge of the CRO industry of late as larger drugmakers refocused their pipelines and smaller players hit funding hurdles.
Cancellations at Kendle came in at around $53 million, but the rate moderated towards the end of the quarter and also continued into the second quarter, with just $1 million of cancelled projects in April.
“While Kendle has had a particularly challenging first quarter, we saw improvement throughout the period and up until today,” said Dr Kendle.
She also said Kendle is experiencing a major increase in strategic partner assessment enquiries from top 20 pharmaceutical companies, suggesting there is still an appetite among larger drugmakers for wide-ranging, high-level agreements.
Dr Kendle believes that big pharma companies are aiming to secure two or three strategic outsourcing providers within each clinical service segment.
“Our customers would appear to be at the end of their pipeline realignments and merger-related disruptions and are settling into selection of CRO partners.”
Phil Taylor
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