UCB inks deal with Parexel & PRA to boost cost-effectiveness

16-Nov-2011 - Last updated on 16-Nov-2011 at 09:46 GMT

UCB has inked a strategic deal with Parexel and PRA that an analyst believes has “very favourable” terms for the biopharm.

Belgium-based UCB signed the strategic deals to increase the cost-effectiveness of its global clinical development programmes. Initial analysis suggests the terms of the deal will help UCB meet this goal.

David Windley, equity analyst at Jefferies & Company, said: “We believe the terms of this agreement are very favourable to UCB, especially in the light of its smaller size. Through the agreement, UCB is looking to expedite drug development and drive cost savings.”

Windley estimates UCB could outsource more than $75m (€55m) a year once the deal matures. This is one-sixth of the potential annual value of the Pfizer deal, Windley said, but “still large enough to get substantial pricing concessions”.

The contract research organisations (CRO) may have agreed to discounts to secure the deal in what Windley said was a competitive bidding process. Parexel has won UCB work in recent years, Windley said, and will now provide services including consulting for regulatory affairs and commercialisation.

UCB is reported to be outsourcing clinical study management and data handling too. Data management was kept in-house before, Windley said, and as such outsourcing penetration will increase.

Both CROs emphasised their eClinical assets in press releases detailing the deal. PRA also referred to its central nervous system (CNS) experience, which along with immunology is an area of focus at UCB.

Asia expansion

In a press statement Iris Loew-Friedrich, executive vice president and chief medical officer at UCB, said the deals will help the biopharm “expand its global drug development activities, including in Asia”.

Emphasis on expanding into Asia may help Parexel. Windley said: “Parexel and PRA are both very capable CROs; however, Parexel may have an advantage in work on larger global trials due to its larger footprint.”

Despite this Windley is concerned about the strategic deals Parexel has won: “If Parexel is unable to leverage operating efficiencies from all of its strategic wins, the company is likely to suffer through a prolonged period of depressed margins.”