New Pfizer deals with Icon, Parexel allay worries over CRO cuts

Pfizer HQ

Fears had been raised that Pfizer’s ($PFE) reliance on CROs could have been in jeopardy after its $160 billion merger attempt with Allergan ($AGN) fell through in April--but these now appear unfounded after it pens new deals with Icon ($ICLR) and Parexel ($PRXL).

And the news gets better for Ireland’s Icon--one of the world’s largest CROs--as the U.S. drugmaker has also written in a clause that could see it extend that deal for a further two years. 

The deal with Parexel will see the company continue to “provide global clinical research and development services to Pfizer in support of clinical development programs across its portfolio,” according to the CRO. Financial details of the two agreements were not disclosed, and nor was the length of the pact with Parexel.

This comes after concerns began brewing that Pfizer’s reliance on CROs would wane as a result of its megamerger failure with Allergan.

Pfizer is a major outsourcer for its research with large tie-ups with Parexel and Icon (which already helps run many of its trials) as well as PPD--but there had been fears that a megamerger would in the short term bring cuts and shuttering of operations from across its CRO services, as the company was projected to make around $2 billion in savings from its research budget.

The failure of the deal in the spring thus brought a sigh of relief to its CRO partners, who could have seen their business ties cut as Pfizer sought to consolidate its R&D budget in the months after a merger.

But some analysts feared that while good news in the short term, in the long term this could have actually been a boon for CROs, given that a combined company would have created the largest drugmaker in the world with a research budget estimated to be more than $9 billion--and a need for outsourced help.

Pfizer does not, however, appear to be any less keen on its long-term contract pacts, given the potential 5-year deal with Icon and the Parexel pact being made so swiftly as the dust still clears from the Allergan deal-that-never-was.

Ciaran Murray, Icon’s CEO, said: “The progression of our relationship with Pfizer is a recognition of ICON’s capabilities in supporting drug development efforts. We look forward to continuing our relationship with Pfizer to help advance its development pipeline and innovation in the drug development process.”

Josef von Rickenbach, chairman and CEO at Parexel, added: “Parexel will continue to leverage its proven clinical processes and expertise to help Pfizer conduct clinical trials and accomplish its drug development goals. Our team is focused on applying dynamic and innovative operational models to help Pfizer develop drugs to improve health and treat diseases for patients around the world.”

Icon released its Q1 results in late April that saw steady growth of 3.1% for the first quarter as sales just tipped the $400 million mark--but this missed analysts' sales estimates, sending its shares sharply downward.

Parexel meanwhile has been forced to make a series of cuts over the past year, which has seen it cut 850 jobs across its global businesses--a move that has saved the company around $40 million.

- check out Icon’s release
- here’s Parexel’s statement

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