PDII losses mount in “very disappointing” ‘08
In-house sales has been one of the divisions hit hardest by pharma’s cost-cutting measures but so far PDII has been unable to profit from this, with CEO Nancy Lurker acknowledging that the year had been “very disappointing”.
Lurker said that these results were a reflection of the challenges facing the whole pharmaceutical industry but remained upbeat that PDII could benefit from these difficulties and shifts in operating practices.
She added: “As large pharmaceutical companies continue to embark on their own efficiencies, we are starting to see a much greater number of requests for proposals for a host of different kinds of sales programs. I intend to make sure that PDI is positioned to win its fair share of these contracts.”
Winning these contracts will be important in Lurker’s attempts to move PDII into the black, which, although she believes is infeasible in 2009, is her long-term goal.
However, for this to be achieved the contracts will have to be more successful than the one PDII signed with Novartis in April 2008. PDII’s product commercialisation segment won the contract, which stated that a 100-strong sales team would promote an unidentified Novartis product over a four year period.
Unfortunately for PDII it made a gross loss of $3.7m on the deal in Q4 and the company does not believe that it can generate sufficient revenues from it to cover contractually required expenses.
Consequently PDII has incurred the estimated loss that would be accrued between now and the contract’s early termination date in February 2010, putting a $10.3m deficit on its balance sheet.
Furthermore the product commercialisation business did not generate any revenues in Q4 and Lurker said no contracts are actively being pursued by the segment, which is the focus of an operational review.
Lurker is also attempting to cut overheads, a policy she has followed since taking the role in November, and has had some success, with operating expenses falling in 2008 and the majority of these savings coming in Q4.
