Like most CROs, Parexel International relies on Big Pharma for most of its service revenue. But the recent explosion in biotech IPOs and venture capital deals has put a lot of money in the hands of small drugmakers, and that's changing the approach for the industry's largest contractors, a company exec said.
In an interview with Investor's Business Daily, Parexel Chief Financial Officer Ingo Bank said his company takes strides to make it clear to biotechs that they won't be considered second-class clients. The CRO set up a dedicated biopharma unit back in 2012, he said, creating a bespoke offering that caters to the particular needs of tiny or even virtual outfits.
And demand is on the rise. Biotechs raised more than $3 billion in IPO cash last year and are on pace to outstrip that figure in 2014. Meanwhile, the industry just posted its best VC quarter since PricewaterhouseCoopers and the National Venture Capital Association started keeping track in 1995, raking in $1.2 billion on 122 deals in Q2.
Parexel isn't the only global CRO to notice the emerging class of biotechs with money and clinical needs. Quintiles ($Q) shelled out for Novella Clinical last year in an effort to expand its services designed for small drugmakers, and KKR, while assembling the mega-CRO PRA, snatched up CRI Lifetree, which makes its money assisting emerging companies. InVentiv Health, Covance ($CVD) and Chiltern are among the sizable contractors offering customized platforms for the same market.
- read the interview