Which firms are the prime suppliers of clinical trial services and technologies? Which can weather the economic storm? The economy in 2009 and 2010 is likely to remain precarious. The life sciences continue to be ever more reliant on outsourcing. Is there a short list of firms that are sufficiently large, experienced and financially viable to survive and prosper even now?

Yes. Finding those companies was the objective of our first annual ClinPage Master Providers List of firms providing services and technology in clinical trials. This is a PDF file with most of the data we gathered (it’s formatted to be printable on an 8-by-14 inch legal page). Below, the same firms are in alphabetical order: 

Covance
ERT
Icon
Kendle International
Medidata Solutions
Medpace
Omnicare
Parexel
Phase Forward
Pharmaceutical Product Development (PPD)
Quintiles
ReSearch Pharmaceutical Services (RPS)

Our criteria for selecting our list were simple. We wanted to consider both private and public firms, since that is the mix sponsors can choose from in the real world. Because clinical trial services and clinical trial technologies are being combined in the real world, we examined both types of companies. We insisted on clinical trial specialists, not companies with exclusively manufacturing, discovery or preclinical operations—and that nudged Charles River Labs off our spreadsheet. 

Inclusion Criteria

We also sought scale. Because the sponsor community is getting larger with mega mergers that were barely contemplated a few years ago, we wanted the names on our list to have financial heft. Larger outsourcing firms that can deliver high quality service will have an advantage in a brutal business climate. So, as a criterion for this year’s list, we required providers to have $100 million in annual revenues.

We don’t share Wall Street’s fixation on quarterly, short-term results, and thus ignored the most recent gyrations of the market, per-share amounts and overall market capitalization. But we did hunt for relatively positive long-term trends in revenues and profits. If a company was spending time in a financial emergency room, or running losses that exceeded 10 percent of revenues, we crossed it off our list. Many trials run for years. Some weak firms in the clinical trials arena may need to be rescued (by competitors or private investors) before the downturn runs its course. 

Given the number of privately held companies in the clinical trial arena, we anticipated that some great organizations might not share financial data to qualify for our list. We were surprised when a few private companies did give us a peek at their numbers. As journalists, needless to say, we are not performing an exhaustive accountant-worthy assessment of any of the companies here.

Also Considered

Beyond that, we also excluded companies that were divisions of much larger organizations. IBM, Oracle, Accenture and similar firms participate energetically in the clinical trial arena, but don’t live and breathe this type of research the way the members of our list do.

Only one of the private companies we contacted, Medidata, shared profit data as part of a stock offering. Some wouldn’t even share their revenue, making it impossible for us to determine if they met our $100 million threshold. Those organizations included Inc. Research; United BioSource; Cetero; and PRA.

One public company declined to specify its contract research organization (CRO) financial data: i3, which is a subsidiary of Ingenix, which is owned by UnitedHealth Group.

In contrast, as previously reported, Omnicare was willing to delineate its CRO-specific revenue at two divisions, Omnicare Clinical Research and Clinimetrics. But Omnicare only disclosed operating income, which was $17.6 million in 2007, up from $13.1 million the year before. We didn’t include that in our PDF chart because the rest of our figures show net income, i.e. the traditional bottom line.

Red Ink

PharmaNet Development Group wasn’t included out of concerns for its financial strength. The company was taken private by JLL Partners in late March; it posted a loss of $251.1 million on $451.5 million in direct revenue in 2008. Its numbers the year before weren’t stellar: profits of $13 million on $470 million in revenue. We wish the company well and will consider it next year.

The same is true of MDS Pharma Services. The company has 3,300 employees and is part of the larger MDS conglomerate. In 2008, it posted a loss of $353 million on net revenues of $482 million. It also had a loss in 2007—$122 million on net revenue of $477 million.

MDS is still reeling from assertions by the FDA regarding the accuracy and validity of certain pharmacokinetic studies conducted in Canada from 2000-2004. The FDA recommended in 2007 that MDS Pharma’s affected clients reevaluate the studies done at that time. Despite the bleeding, MDS had a good last quarter of 2008, and announced some healthy new business wins: $643 million, up nearly 30 percent from fiscal 2007.

—by Suz Redfearn

This article discusses the individual companies on our list in detail. This article was an overview of the list. Readers with questions, comments or ideas to improve next year’s effort are encouraged to contact .(JavaScript must be enabled to view this email address) the site’s editor.