A Riskier, But Perhaps More Profitable, CSO Business

Executive Summary

At a time when much of the pharmaceutical outsourcing sector is struggling-with CROs particularly dragging over the last several years-the contract sales and marketing industry remains solid. One thing the CROs and CSOs do have in common is a desire to form risk-sharing partnerships with their clients that will bring them higher margins than traditional fee-for-service contracts. Last October, PDI's LifeCycle Ventures Inc. subsidiary inked a five-year agreement with Glaxo Wellcome Inc. for the exclusive US marketing, sales, and distribution rights for Ceftin, an oral antibiotic used in treating acute bacterial respiratory infections. PDI had to create an infrastructure with all the various commercial components, and since the deal, its share prices have been on a singularly impressive roller coaster ride. But PDI is once again looking for risk-sharing arrangements, although future deals may involve a more limited set of services than it is providing in connection with the Glaxo deal.