Partnerships in Clinical Trials - Wall Street's 2010 Forecast and Analysis of Outsourcing Trends

Moderator: John Kreger, Equity Research Analyst, WILLIAM BLAIR & COMPANY
Panelists: David H. Windley, CFA, CPA, Managing Director, Healthcare Equity, JEFFERIES & COMPANY
Eric Coldwell, Managing Director, Healthcare Distribution and Services Equity Research, ROBERT W. BAIRD

A panel discussion was held to address Wall Street Observations related to the pharmaceutical and biotechnology industry. Overall, there is optimism that these sectors have seen the worst and the forecast is that the industry will grow slowly over time.

The major factor impacting the industry is the economy over the last 2 years. Numerous indicators were discussed to drive home the fact that the industry is now in a recovery mode. The future, according to panel members, appears to be favorable for pharmaceutical and biotech companies.

Investors have high optimism as there is readily available cash for investment purposes. CRO stock prices are high and have done well in a down economy. Growth was modest at best but it was growth none the less. Gross margins, net profits as well as operating expenses were up across the board for the top six pharmaceutical companies.

Predictions for the future included increased budgets, available money for investment purposes and R&D spending will be increased. It is thought that most companies will look for licensing efficiencies as a future strategy for growth. Larger companies appear to be funneling their resources into fewer, global CROs. It was also stated that R&D growth must be adjusted to lower ROI environment given the state of the economy.