PPD bounced back from a profit slump in the second quarter of 2010 to report operating income up by 10.1% to US$56.8 million for the third quarter ended 30 September.
The US-based contract research organisation (CRO) has also announced three new alliances addressing medical imaging services, chemistry, manufacturing and controls (CMC) development, and clinical trials in India.
PPD’s net revenues for the third quarter were US$365.4 million, 7.3% higher than in the same period of 2009. Income from continuing operations before tax rose by 0.5% to US$53.2 million, while diluted earnings per share were flat and in line with analysts’ estimates at US$0.32. Analysts polled by Thomson Reuters were expecting net revenues of US$346.3 million.
The company’s operating margin expanded significantly on a sequential basis during the third quarter, due to “improved performance in emerging markets and our focus on overall company spending”, noted chief executive officer David Grange.
“Our strong performance demonstrates our organisational focus and drive aimed at achieving our 2010 objectives and creating long-term value for our shareholders,” he added.
New business segments
Following the spin-off of its compound partnering business, Furiex Pharmaceuticals (completed on 14 June), PPD is no longer reporting separate results for Discovery Sciences and has split its Development segment for reporting purposes into two operations, Clinical Development Services and Laboratory Services.
Overall, the former Development segment recorded net revenues of US$339.4 million for the third quarter of 2010, up by 7.5% year on year.
Net revenues for Clinical Development Services, which comprise global Phase II-IV clinical trial management services, were US$260.3 million, an increase of 4.1% over the third quarter of 2009. Operating income in this segment rose by 11.4% to US$43.7 million.
The Laboratory Services segment includes Phase I clinic, current Good Manufacturing Practice, bioanalytical, central laboratory, vaccines and biologics, and BioDuro/discovery services. It reported net revenues of US$79.0 million for the third quarter, up by 20.0% over the year-before quarter, while operating income was 2.7% ahead at US$13.2 million.
Gross authorisations company-wide for the third quarter came to US$663.8 million and PPD’s backlog as of 30 September was US$3.4 billion. Contract cancellations and adjustments for the quarter were US$220.9 million, including two large project cancellations totalling US$92.8 million.
The three alliances PPD has announced over the last few days are:
• A strategic tie-up with VirtualScopics, a US company that provides imaging solutions to accelerate drug and medical device development. The alliance involves integrating VirtualScopics’ algorithm-based approach to image analysis and biomarker measurement with PPD’s clinical development offerings, medical expertise and global footprint.
The result, the companies say, will be more efficient tailored services addressing key areas of the clinical trial process such as study start-up, patient screening and enrolment, determining endpoints for radiographic response and progression, imaging data management, and proactive risk management.
• A collaboration with US company Bend Research, under which the two partners will refer potential business opportunities to one another in the fields of compound characterisation, particle engineering, formulation development, clinical trial material manufacturing, analytical development, stability programmes, and Good Manufacturing Practice-compliant release and quality control testing.
Bend Research specialises in drug formulation development and manufacturing technologies, working with more than 50 pharmaceutical and biotechnology clients worldwide. A key area of collaboration with PPD will be inhalation formulation development and particle engineering for drug therapies.
• An agreement with the Himalayan Institute and Hospital Trust (HIHT University), a teaching hospital in northern India, to create a large investigator site for the region. PPD will develop the site by providing infrastructure support and exclusive training for staff.
The agreement will give biopharmaceutical companies access to large patient populations and to investigators who can manage clinical trials in accordance with International Conference on Harmonization/Good Clinical Practice guidelines, PPD said. HIHT University runs a 750-bed, multi-speciality tertiary care hospital, while the outpatient department treats around 1,500 patients daily.