Kendle International: Clinicial trials and tribulations

It’s hard to believe, but the average drug sitting on the shelf in your medicine cabinet costs $800 million and 10 years to develop.

Any astute investor might wonder where that $800 million goes and whether he can profit from it. A good chunk of the investment is earmarked for early pre-clinical trials and the three phases of FDA approvals, more and more of which are being outsourced by both Big Pharma and Biopharma to companies such as Kendle International (Nasdaq:KNDL), one of the leading clinical research organizations (CRO) in the world.

Founded in 1981 by Dr. Candace Kendle, PharmD, the Cincinnati, Ohio firm has a market cap of $724.7 million and has consistently demonstrated an eye for the strategic opportunity. It is one of the smaller CROs, but has positioned itself to play on a global scale. It employs nearly 4,000 people in 48 office locations in 28 countries on six continents. Scale is important for a vendor supporting the increasingly global pharmaceutical industry, as both development spending and revenue shifts out of North America and into Asia/Pacific, Latin America, and the rest of the world. With offices in Australia, China, India, Singapore, and throughout Latin America, Kendle is well positioned to benefit from this significant shift.

Size and reach are also important in the “megatrial” market, the fastest growing segment of the CRO industry. Just as the name implies, megatrials are large-scale, long-term controlled research studies that require thousands of patient participants (usually 10,000 or more), strong project leadership, and a high level of technology to collect and analyze the resulting data. Kendle’s organic growth and crafty acquisitions have built a company that is fully capable of competing for these mega projects.

In 2006, Kendle acquired Charles River Laboratories, a provider of Phase II-IV Clinical Services. The acquisition boosted the company’s size by 50% and . . .

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