Pharma research companies slipping

Pharmaceutical research companies are starting to feel the pain of cost cutting in the industry. Layoffs aside, budget cuts and research delays mean less work for outside research companies, which could add to a vicious cycle of decreased research and affect already-struggling drug pipelines. 

One pharma CRO in particular, Parexel International, saw its shares plummet yesterday by 38 percent, by $5.20 per share. The company reported that it expected decreased earnings and lower revenues in 2009. For its fiscal quarter, profit dropped below Wall Street expectations.

Just a few days earlier, Covance, another CRO and a direct competitor of Parexel, said that drug companies were conserving cash by delaying or even stopping early stage drug trials. "The stock market has been unkind to the research companies. An index kept by Revere Data slid 24.5% on Tuesday, despite sharp gains elsewhere on Wall Street, and it is down 57.2% so far in October," according to a report in Forbes.

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