CRO Parexel To Cut About 850 Jobs Worldwide

By David Ranii

Contract research organization Parexel, a major Triangle employer, is laying off about 850 workers – roughly 5 percent of its worldwide workforce – in a cost-cutting move.

The Boston-based company announced the layoffs earlier this week in conjunction with updated forecasts that anticipate lower revenue and earnings per share for its fiscal fourth quarter and for its new fiscal year that begins in July.

Parexel has 1,100 employees in North Carolina, mostly based at its offices in the Triangle as well as employees who work from home.

The company isn’t specifying how many jobs are expected to be cut locally.

Spokeswoman Cristi Barnett, noting that “the vast majority of Parexel employees will not be impacted by these changes,” stated in an e-mail: “All areas of the business are being asked to review their structures and operations. Some of these reviews will result in changes, whereas others will not.”

Parexel has about 17,440 workers worldwide.

The company beefed up its presence in the Triangle after GlaxoSmithKline announced a round of layoffs in December. About 400 GSK employees whose jobs were cut were offered positions at a new Parexel business unit that does drug-development work for both GSK and other pharmaceutical and biotechnology companies.

Parexel’s president and chief operating officer, Mark Goldberg, talked of the strategy behind the restructuring at the company’s annual analyst day presentation this week. “We remain focused on growth and, at the same time, view profit improvement as an absolute priority for the company,” he said.

Parexel, which will take a pre-tax charge of $35M to $45M as a result of the restructuring, anticipates it will achieve $50M to $60M in annual savings as a result – including $20M to $30M in savings in the coming fiscal year.

Parexel projects that revenue for its fiscal fourth quarter will range from $517M to $533M. The company’s earlier guidance, issued at the end of April, anticipated revenue of $520M to $540M.

Contract research organizations, or CROs, help pharmaceutical and biotechnology companies conduct clinical trials of experimental drugs and analyze the results. The Triangle is the epicent of the CRO industry, boasting more employees than anywhere else. In addition, three of the largest CROs – Quintiles, which is No. 1, INC Research and PRA Health Sciences – are headquartered here.

Parexel CEO Joseph H. von Rickenbach told analysts that the largest CROs are gaining market share at the expense of their smaller competitors.

He said that the overall CRO market “is growing at a healthy 7 percent” annual rate, but noted that not all CROs are growing at the same rate.

“It is conceivable that two years from now, Parexel and the other top CROs could make up about 60 percent of the market, and that’s in sharp contrast to about 40 percent not too long ago,” he said.

Parexel projects that its long-term revenue growth will be in the range of 10 percent to 12 percent.

The company’s shares closed Thursday at $65.80, down $1.16. The stock is up 18 percent this year.