Shares of Parexel International took a beating this morning after the CRO noted a shortfall in early-phase research work that is triggering a restructuring in that segment of its drug research business. Parexel, one of the top CROs in the business, also cut its outlook on 2011. And investors responded by taking a 22 percent chunk out of its stock price.
"During the third quarter, a shortfall in Early Phase revenue and slower than expected revenue conversion from backlog in the rest of CRS negatively impacted the quarter's results," said CEO Josef H. von Rickenbach. "Delays with a few key programs have pushed revenue out to future quarters, while, at the same time, we have a significant number of large projects in backlog that continue to be in the lower revenue generating start-up stages."
Parexel, though, isn't just cutting. The CRO also says that it plans new hiring for its Clinical Research Services operations. "This ramp-up in hiring is taking place ahead of significant levels of revenue being generated from these projects, which will put pressure on operating margins in the near-term," said the CEO.
New business in the quarter hit $566.5 million, with cancellations totaling $132.4 million and its backlog growing 34 percent to $3.19 billion. In a new survey of CROs by CenterWatch, Parexel landed in the top 10. PPD came in at the top of the list.
- read the Parexel release
- see the report from the AP