CEO Joe Herring told a conference call that Covance has experienced both a reduction in new projects and delays to existing ones, so the firm has trimmed its earnings per share forecast for 2008 down to $3.02 from $3.18, excluding any gain from Covance’s sale of its electrocardiogram business in November 2007.
On the positive side, he said, late-stage clinical development remains buoyant, with orders for central lab and clinical services well up on both the third quarter and the fourth quarter of 2007.
“Delays in clinical pharmacology were the biggest issue in early development in the third quarter,” Herring told a conference call. In addition, the European preclinical business posted weaker results due to a “substantial reduction in work from a large pharma client which pared down its pipeline last spring.”
The North American laboratory business did better, helped by the opening of new capacity at Covance’s toxicology facility in Madison, Wisconsin, but there was a general downturn in work from smaller companies, he said.
Covance’ attention is being drawn to some cost-cutting measures, but while the group will allow headcount to drop by only “selectively filling headcount attrition,” continued Herring, but redundancies are not expected as “we expect an increase in business flow in toxicology and clinical pharmacology in the coming months.”
2009 forecasts
For 2009, Herring is predicting full-year revenue growth to be in the range of 5 to 10 per cent over 2008, with EPS in the range of $3.00-$3.20.
Highlights of the coming year will include the opening of Covance’s early-stage laboratory testing facility in Chandler, Arizona, which Herring anticipates will become profitable in the first quarter of 2009.