A shift among drugmakers to prefer existing patients, rather than healthy volunteers, for early stage trials, is forcing Parexel, one of the largest contract research organizations, to close offices and eliminate jobs. Specifically, the CRO is cutting up to 30 per cent of Phase I capacity and around 300 jobs, or about 3 per cent of its 10,350 workforce, according to afiling with the Securities and Exchange Commission.
Other factors are at work, though. The CRO acknowledged that some clients delayed the start of large projects, underscoring the weakness of the pharmaceutical pipeline. Meanwhile, as Outsourcing Pharma points out, Parexel execs believe the shift away from trials in healthy volunteers is permanent, or at least demand will be lower for the foreseeable future.
"We believe that the market for healthy volunteers is not going to be growing much, whereas the market for patient studies is growing more”, Parexel ceo Joseph von Rickenbach told investors on an earnings conference call. “I think historically some of the studies that were done…were probably premature. Clients are streamlining there development plans and conducting studies as needed to get to the next stage.”
To compensate, von Rickenbach hopes that later stage development work will grow as the CRO continues to pursue strategic alliances with drugmakers that extend beyond the usual consulting work. According to Lazard Capital Markets analyst Stephen Unger, Parexel plans to add about 150 staffers, after accounting for the layoffs, to handles projects that are backlogged.