Parexel shifts to meet functional service demand

As more and more sponsors look for cost-effective solutions and shun preferred-provider relationships, CRO giant Parexel ($PRXL) has launched a new functional service offering for pick-and-choose drug developers.

Parexel's new business will fall under its Clinical Research Services unit, providing clinical operations, data management, biostatistics, medical writing and other services cafeteria-style, a model Parexel said is growing in popularity among sponsors. The CRO may sell these services through selective insourcing, full-fledged outsourcing or some customized combination, Parexel said.

"Clients increasingly need flexibility when choosing an outsourcing model that aligns with their path to drug development," COO Mark Goldberg said in a statement. "By creating this operating unit, we are taking a more proactive and focused approach to compete in the growing global functional services market. Of particular importance, we'll be able to strengthen our relationships with clients of all sizes by providing a broader mix of full programmatic and functional outsourcing."

In some cases, a functional service provider deal could provide the building blocks of a strategic partnership, the company said, but Parexel is also content to offer piecemeal services to clients that might not otherwise be able to afford outsourcing.

Parexel is hardly the first large CRO to get into the functional service game, as INC Research, inVentiv Health ($VTIV) and Icon ($ICLR) have all launched new offerings over the past year and change. And while the model is often ideal for mid-size sponsors, heavyweights like Merck ($MRK) and Eli Lilly ($LLY) often favor such agreements for the freedom they provide, unlike preferred-provider arrangements.

- read the announcement