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ICON and Pfizer Extend Ties, Sign New Agreement

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Contract research organization (CRO), ICON Plc (ICLR - Free Report) , recently signed a three-year service agreement with its existing customer Pfizer Inc. (PFE - Free Report) . The drug giant has the scope to extend this agreement by another two years.

Last month, ICON along with Pfizer won the “Clinical Research Team of the Year award” at the inaugural Clinical and Research Excellence (CARE) Awards. The team won the award for its achievements in 2015 on two parallel cardiovascular studies, which involved approximately 26,000 patients at 3,000 sites across 35 countries.

The parallel studies are investigating the ability of bococizumab (an investigational compound) to reduce the risk of cardiovascular events in a broad range of high-risk primary and secondary prevention patients.

CRO Services in Demand

The renewal of the Pfizer contract is definitely a major positive for ICON. However, the growing demand for the company’s services from mid-sized pharma and biotech companies is more encouraging. ICON’s expanding footprint in this particular market diversifies its revenue source and reduces dependence on larger customers, which are now at a maturing stage.
 

ICON PLC Revenue (TTM)

ICON PLC Revenue (TTM) | ICON PLC Quote

ICON’s backlog increased 9% in the first quarter of 2016 from the year-ago quarter, while net book to bill was 1.1 times. Strong funds flow from mid-sized companies offset lower bookings from some of the company’s larger clients who were slow to confirm orders in the quarter.

Focus on Technology Platforms

The customer wins are primarily driven by ICON’s differentiated technology platforms. We believe the company is poised to gain market due to its continuing investments in ICONIK, ADDPLAN and Firecrest platforms.

Moreover, strategic partnerships with the likes of International Consortium for Health Outcomes Measurement (ICHOM), IBM Watson and Genomics England are key catalysts. Additionally, acquisitions of Inclinix-PMG Holdings, MediMedia Pharma Solutions and Aptiv are key growth drivers.

Finally, tactical capital deployment and a strategic policy of increasing shareholders’ value through buybacks are key positives.

Zacks Rank & Key Picks

ICON has a Zacks Rank #3 (Hold). Air Methods and AMN Healthcare are better-ranked stocks in the medical services industry. Both the stocks sport a Zacks Rank #1 (Strong Buy).

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