PRA International has found that helping drug companies figure out how to defeat deadly diseases is great for business.
The Reston company, found-ed in 1981 as a data management operation, now manages clinical research trials for pharmaceutical companies, which use databases created by PRA International to seek approval from the Food and Drug Administration for new drugs or biotech products.
PRA International targets its contracts in areas where medical research is most intense, which means 60 percent of its work involves research into treatments for cancer and diseases of the central nervous system.
“Those are the top two areas where money is spent looking for the next blockbuster drug,” said J. Matthew Bond, PRA International’s chief financial officer.
Therein lies one of the company’s major obstacles to growth. Finding employees with the technical expertise to perform the contract research is difficult.
“Those are the tougher trials to execute,” Mr. Bond said. “There’s also a consulting burnout aspect to this business. We’ve got people on the road from Monday through Thursday.”
The company boasts a payroll of about 2,500 employees in 24 offices worldwide. It has landed contracts in Japan and Europe and is trying to expand in Asia and Latin America.
Last year, PRA International raised $100 million from a public stock offering to expand its business. It recently acquired two biotech product development consulting companies.
Industry analysts say the company’s outlook is strong.
“We think the company is more focused on operating discipline, profitable growth and cash flow than its competitors,” said John Kreger, a stock analyst for the financial firm William Blair & Co.
PRA International’s acquisitions of seven other companies during the past six years have produced about one-third of its growth. The rest has come from expanding its core business, Mr. Bond said.
The company’s two most recent acquisitions, GMG BioBusiness Ltd. and Regulatory/Clinical Consultants Inc., are consulting businesses that are intended to help PRA International’s customers comply with government regulations.
The company earned $277.5 million ($1.02 per diluted share) last year, up 30 percent from net income of $247.9 million (71 cents) a year earlier. The company posted a 15 percent profit margin in 2004, beating the 12 percent average profit margin for contract research organizations last year.
Earnings for the first quarter of 2005 totaled $73.6 million (28 cents diluted), up about 9 percent from net income of $66.8 million (12 cents) a year earlier.
PRA International shares closed up 22 cents yesterday to close at $28.96 on the Nasdaq Stock Market.
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