 | |
- close
- close
|
|
Topic
Top news source/blog that we're missing
Why do you recommend this news source?
|
||
WIKI ANALYSIS
Pharmaceutical Product Development, Inc (NASDAQ: PPDI) is a global contract research organizations (CROs).[1] A CRO serves as a middle-man who finds doctors, recruits patients, and compiles data. CROs are organizations that offer many different pharmaceutical research services to clients.[2]
PPD has offices in 33 different countries and has partnerships with pharmaceutical, biotechnology, medical device, academic and government organizations.[3] The goal of PPD is to maximize the returns of its clients' and partners' research and development investments.[1]
Company Overview
The use of CROs, such as PPD, is increasing as these kind of companies become more and more crucial to drug development. CROs help accelerate the time of developement and project failure decisions and help increase approval success rates among outsourcing partnerships. [4]The company offers a range of services, from toxicology testing and biomarker discovery in the earliest phases of drug research, to the management of large, multi-site clinical trials, in which drug compounds are tested in humans. PPD is also developing some of its own compounds in partnership with other firms. Its customers include most of the world's 50 most prominentpharmaceutical companies. [5]
Business and Financial Metrics
From January 30, 2007 to July 30, 2007, PPD's revenues increased 12%, reaching $682.2 million. Net income increased 8%, to $84.6 million. Net income was partially offset by an increase in research and development expenses, higher selling, general & administrative expenses and increased depreciation expenses.[6]
| Figure | 2003 | 2004 | 2005 | 2006 | 2007 |
|---|---|---|---|---|---|
| Revenue (in Millions) | $727.0 | $841.3 | $1037.1 | $1247.7 | $1415.5 |
| Operating Income (in Millions) | $78.7 | $148.0 | $194.6 | $220.0 | $230.0 |
| Net Income (in Millions) | $46.3 | $98.9 | $131.5 | $156.7 | $163.4 |
Business Segments
PPDI operates in two segments:
- Development Group (98% of net revenue)[8] - The Development Group puts its focus on the clinical stages of the development process. Development services are offered both individually or as an integrated package. [9] The Development Group works on assisting clients in optimizing their research and development investments through the clinical stages of the development process. The core of PPDI's development business is a package of services for Phases II through IV clinical trials which, along with its other services, allows the company to offer its clients a package of clinical management services.[10]
- Discovery Sciences Group (2% of net revenue)[8] - The Discovery Sciences Group focuses on the discovery research part of the biopharmaceutical research and development market. This Group offers services to clients such as the Biomarker Discovery Sciences and the Compound Collaboration Programs. It also offers services and technologies for selecting drug candidates for clinical trials.[11] PPDI's preclinical biology group integrates pharmacology, metabolism, pharmacokinetic and toxicology capability to provide preclinical program design and project management services. The company also offers a range of preclinical services, which include preclinical program design; specialized preclinical oncology and research models; toxicology consulting; laboratory services, and technical writing and regulatory submissions. [10]
Although the biotechnology industry accounts for a smaller portion of total industry research and development spending, the rate of biotechnology companies' expenditure is higher than traditional pharmaceutical companies.[12]
| Percent per net revenue | |
|---|---|
| Pharmaceutical | 58.7 |
| Biotechnology | 29.1 |
| Government and Other | 12.2 |
Key Trends and Forces
Costs of Research and Development for Biopharmaceutical Companies is Increasing, Accelerating Growth in the Outsourcing Market
New drug development costs have risen from $0.8 billion (1997) to an expected $1.9 billion (2013).[4] The average total research and development costs for new drugs in the late 1990s was more than double the cost in the 1980s and more than 5 times the cost in the 1970s. This increase in cost is driven by steep increases in costs for clinical testing - the number of experimental subjects and the complexity of the clinical trials have both increased.[14] These increases in costs are driving companies to switch to outsourcing for drug development (CROs). Companies are finding that outsourcing ends up saving them large amounts of time and money. [4] The CRO market is expected to grow at an annual rate of 14-16% per year[15], giving PPD much potential to grow.
Move to More Global Clinical Trials Lets Large CROs Increase Market Share
A record number of clinical trials are being done with Investigational New Drugs (INDs) than before.[15] The United States Food and Drug Administration (FDA) investigational new drug program is the means by which pharmaceutical companies obtain permission to ship experimental drugs across state lines.[16] The desire for more global clinical trials is helping large CROs seize market share from smaller companies.[15]
Increase in Potential New Drug Candidates Pushes Companies Toward Using CROs
Over the past 5 years, the number of drug compounds in different stages of development has increased steadily. Since many biotechnology and []pharmaceutical]] companies do not have sufficient resources to pursue development for all of these upcoming drugs, they are looking to drug discovery and development outsourcing companies (CROs) to reduce cost. [17]
Competition
PPD is one of the largest CROs and so competes with major and national CROs. Among these, the most important include:
- Covance (CVD) - Covance is one of the largest CROs and has annual revenues of over $1.4 billion. It became publicly traded in 1997 and provides the world's largest central laboratory network. [21]
- PAREXEL International (PRXL) - PAREXEL is a CRO that works out of 50 different countries and has helped 20 of the top 20biotechnology companies and 10 of the top 10 largest pharmaceutical companies.[22]
- Charles River Laboratories International (CRL) - Charles River Labs is the 4th major CRO and works out of 15 different countries. It deals mainly with selling mice and rats to biotechnology and pharmaceutical companies.[23]
- Quintiles Transnational Corp - Quintiles is a privately held company that does not release fiscal data. It holds 14% of the global market share.[24]
Market Share of PPDI
Of the large, global CROs, Quintiles has the largest share, 14% of the global market share, followed by Covance and PPD, holding 10% each. The five largest CROs have increased their market share and hold 45% of the total market.[24]
References
- ↑ 1.0 1.1 PPDI 2008 10-K, Item 1: Business Overview, page 1
- ↑ Wikipedia: Contract research organization
- ↑ Pharmaceutical Product Development, Inc. Website
- ↑ 4.0 4.1 4.2 Wai Lang Chu."CRO's drug R&D contributions have never been more significant"
- ↑ Hoovers profile: Pharmaceutical Product Development, Inc.
- ↑ PPDI Website: Financial Information
- ↑ MorningStar Financial Statement (PPDI)
- ↑ 8.0 8.1 PPD Second Quarter 2008 Reports
- ↑ PPDI 2008 10-K, Item 1: Business Overview, page 9
- ↑ 10.0 10.1 Reuters: Pharmaceutical Product Development
- ↑ PPDI 2008 10-K, Item 1: Business Overview, page 7
- ↑ PPDI 2008 10-K, Item 1: Business Overview, page 5
- ↑ 13.0 13.1 PPDI 2008 10-K, Item 1: Business Overview, page 15
- ↑ Mark Moran. "Cost of Bringing New Drugs To Market Rising Rapidly"
- ↑ 15.0 15.1 15.2 "The CRO Market Outlook" - Business Insights
- ↑ Wikipedia: Investigational new drug
- ↑ PPDI 2008 10-L, Item 1: Business Overview, page 4
- ↑ Yahoo! Finance PPDI vs. CVD
- ↑ Yahoo! Finance PPDI vs. CRL
- ↑ Yahoo! Finance PPDI vs. PRXL
- ↑ Wikipedia: Covance
- ↑ PAREXEL - Case Studies
- ↑ Reuters: Charles River Labs, Inc.
- ↑ 24.0 24.1 Business Wire - "The Total CRO Market Size Is Estimated at $14bn in 2006 and Expected to Grow at an Annual Rate of 14-16% to Reach $24bn Through 2010"
| ||||||
|
|
