Pfizer sticks with Parexel and Icon

12-Jun-2016 - Last updated on 13-Jun-2016 at 15:20 GMT

Increased oversight and sponsor involvement will be key to CRO partnerships and is a "win-win" for both parties. (Image: iStock/Jirsak)

After much speculation, Pfizer has confirmed it will renew its service agreements with its largest contract research organization customers – as analysts suspected.

The announcements from both Parexel and Icon were released on Friday.

Icon announced it has signed a three-year agreement with Pfizer under which Pfizer has the right to extend the term for up to an additional two years.

While the length of Parexel’s agreement was not announced, analysts expect it to be similar to Icon’s agreement. Parexel’s current five-year contract began in June 2011 with an implied end date sometime this month.

Other agreement specifics, including financial details, were not disclosed by either company – yet analysts have been nervous about changes in pricing terms.

As Outsourcing-Pharma.com previously reported, the renewals have been a question of concern for some time, specifically as CROs revenues have been on the decline.

However, Garen Sarafian¸ VP, Healthcare Technology & Distribution, Citi Research, said, “We note that pharma client channel checks suggest that while price is always important, the quality of the work along with speed to market by their selected CROs remain paramount.”

Sarafian added that Citi Research maintains a favorable outlook on Parexel with the renewal news. “Furthermore, the outlook for drug pipelines remains robust, with further company specific upside from its margin acceleration program,” he added.

Out-of-sight but not out-of-mind

Additionally, David Windley, CFA, CPA, Managing Director, Healthcare Equity Research at Jefferies also told us that it is likely that Pfizer will want its CROs to use information systems to provide Pfizer with regular updates on trial progress.

“As Pfizer is handing over more management responsibilities to CROs, they still want to be able to see very easily, on a daily basis: what’s my status,” he said.

This want for increased oversight into the clinical trial process has been gaining traction for years. As Outsourcing-Pharma.com previously reported, Pfizer and Amgen said oversight was key to CRO partnerships from PCT in 2013.

Additionally, last week at BIO International in San Francisco, Cory Lewis, Cook Pharmica, said the company is seeing more sponsors calling for clinical trial agreements to require management “touch points” on a more routine basis – and specifically building this into the contract.

“It’s only a win-win when you can create those relationships,” he told the audience at an outsourcing panel at BIO.