ICON Gets Some Love from Investors Business Daily

By: TraderMark Saturday, August 09, 2008 12:42 PM

Symbols: CVD, ICLR, PRXL

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The company (NasdaqGS:ICLR - News) manages clinical trials for drug and biotech firms, and its clients are clamoring, if not desperate, for its services.

Drug firms are increasingly outsourcing at least some of their research and development work as part of ongoing cost-cutting moves.

"(Clinical trial) volume is growing as drug companies are downsizing and consolidating," said Ken Getz, senior fellow at the Tufts Center for the Study of Drug Development. "So they're looking to hire flexible contract resource organizations (CROs) to manage the volume."

At the same time, biotech outfits are looking to outsiders to handle clinical trials since they typically don't have the means to handle the work in-house. Many of the smaller firms, in particular, are entering their drugs for clinical trial for the first time.

"Big pharmaceuticals need to outsource to save money. Biotechs have to outsource because they don't have an option," said analyst Eric Coldwell of Robert W. Baird.

Demand for CROs will likely grow 16% a year for at least the next few years, a recent Tufts forecast said

What's more, up to 65% of FDA-regulated clinical trials of the top drug firms will be done outside the U.S. within three years, up from 43% today, Tufts said in its report. The reason cited: lower costs abroad and ready access to large numbers of "treatment-naive patients." The latter are patients who don't take any prescription drugs and thus are best suited for clinical trials. Treatment-naive patients are more likely to be found in emerging markets outside of the U.S. and Western Europe.

"Growth in this industry is increasingly happening in emerging economies like Eastern Europe, South America and the Pacific Rim," said John Kreger, an analyst at William Blair & Co. "This work is going where the patients are."

Icon is there. It has 71 offices in 38 countries, including emerging markets in Asia and Latin America.

Most of the top CROs have global operations as well.

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