Pharmanet reaches turning point in Phase I biz
in its attempt to finally close the doors on a long period of
trouble with its Phase I clinical business.
The large contract research organisation (CRO) has finally completed the move to new premises in Quebec City and has also opened a new Phase I clinic in Toronto, both of which it has been vigorously preparing in order to accommodate the Phase I unit's retreat from Miami in 2006. The company closed its Miami facility and ended its ties with Phase I and bioequivalency studies in the US after the site became plagued by government and media scrutiny in 2004 when allegations were made over its inadequate clinical trial patient recruitment and informed consent practices. The business segment had been acquired from Anapharm in 2002. In addition, one of its 350-bed Miami facilities, which it bought in 2004 for $12m (€8.8m) as part of an expansion plan, was found to be unsafe and in breach of serious building code violations. These events resulted in a significant decline in business and large legal bills for PharmaNet's Miami operations, which at the time also served as the company's headquarters and was touted as "the largest Phase I and early Phase II clinical trials facility in North America," with a total of 675 beds. Obviously the firm had been dealt a severe blow, and it began moving all its early-phase operations to its two smaller, existing early-phase sites in Canada - Quebec and Toronto - in order to start afresh. Taking this a step further, the company also changed its name from SFBC International as it was known then, to PharmaNet, after its more successful late phase arm. The company will be pleased to have the Phase I unit finally settled into its 'new homes'. Not least because the early clinical unit restructure in Canada has continued to have an impact on the firm's operating margin, which sank 3 percentage points to 9.4 per cent in the fourth quarter of last year. $5.8m was spent on the Quebec facility alone during the quarter. In addition, a lower volume of work coming through the unit has inevitably resulted in lower revenues for the company's Early Clinical Development segment. The opening of these new facilities will now allow PharmaNet to begin to grow its early phase business back up to its former glory. The new Quebec City facility is scaleable and the company said it also has leeway to expand the laboratory and 200-bed clinic in the future. Fifty new jobs have already been created at the site. It is intended that the Quebec site will become a hub for branded early-phase work, which PharmaNet has been focusing on growing - this year it accounted for roughly 35 per cent of early-phase business, while last year it was around 10 per cent. "I believe we are beginning to make progress here, although it will take a while to migrate clients to this new location," said Jeffrey McMullen, president and CEO in an earlier webcast. The new clinical facility in Toronto contains four clinical units that can accommodate a total of 160 beds. McMullen told Outsourcing-Pharma.com in an earlier interview that the firm "won't open this new facility until we have enough volume of work to make sure it is profitable," so it seems as though that time has now arrived. Meanwhile, PharmaNet has also been busy in other global locations beside Canada and has just opened new offices in Brussels, Belgium and Milan, Italy to serve its late phase business. In addition, the company has relocated its Zurich, Switzerland office to allow for future growth of its staff. "In support of the continued growth in demand for clinical development services and the trend towards more large, global studies, we are opening additional office locations and clinics to intensify our presence in the region and meet the needs of our clients around the world," said Mc Mullen. The new offices in Brussels, Milan and Zurich are strategically located to provide support to clients conducting late stage clinical development programmes in these regions. The Brussels office has a staff of five, the Milan office has nine office-based employees and supports a number of field-based regional staff and the new location in Zurich currently accommodates 26 employees. Each office includes room for future expansion, said the firm. PharmaNet said it is also in the process of expanding the laboratory capacity of its Barcelona joint venture and expects to occupy the new Barcelona facilities mid-year 2007.
