Omnicore's CRO sees 2008 profit

At the CRO, Omnicore Clinical Research, operated by Omnicore, they reported an adjusted profit of $17.6 million profit from the 2008 year, up from $13.1 million in 2007. Before the profit was adjusted, they saw business totaling $49.1 million. For more, read this article.

Growth of CRO’s

We have posted some articles recently on the growth of the CRO industry. This article from The Motley Fool confirms what others have been saying and provides some more insight into this development. As can be seen by the chart featured, over the past year, CRO’s have seen their revenues increase. The article makes a point of stating that much of this growth is a result of the drug companies looking for ways to cut costs, with the current state of the economy, by outsourcing their research. Also, considering that their revenue is not tied to the success of a particular drug, their risk is minimal.

	1- Year Return	TTM Diluted EPS Growth
Covance (NYSE: CVD)	25.5%	24.1%
Paraxel International (Nasdaq: PRXL	39.2%	38.3%
ICON (Nasdaq: ICLR	73.8%	37.8%
Charles River Laboratories International (NYSE: CRL)	29.2%	22.1%
WuXI PharmaTech (NYSE: WX)	24.4%	N/A

Some important points the article makes are:

“It doesn't look like the growth that CROs have experienced over the last few years is likely to go away any time soon, either. A recent report by Turner Investment Partners estimates that in the next few years CROs will be involved in half of all drugs at some point during development.”

“What's interesting though is that the CROs may be shifting who their source of revenue . Many smaller biotech companies are now using CROs' expertise to get early drug development done. That same report estimates that biotech now accounts for 30% of CROs revenue globally, up from 21% five years ago.”

Clinical Testing Company Seeing Rise in Profits

Covance, a contract research organization, is one company that is proving the prediction that pharmaceutical companies are starting to rely on them more heavily. This article mentions that profits have risen for the Covance by 22.7%. The contract research organization industry is one of the few that is experiencing growth in an otherwise dismal economy. As mentioned in our previous blog post, much of this is because the cost of in house procedures is much more expensive than that of outsourcing to companies such as Covance. The company is also very optimistic in its outlook, which is inline with the trend, and predicts that they will be able to post a 20% growth in profit by the end of 2008.