Associated Press
RALEIGH -- Pharmaceutical companies previously did all their own research and testing and submitted the results to the Food and Drug Administration for approval to put a medication on the market. The agency's review was devised to settle concerns about the drug makers' vested interest in showing a pill was safe and effective.
Since the 1990s or so, Big Pharma has farmed out more and more of that testing to companies like Quintiles Transnational Corp., which grew quickly to meet the demand.
Now Durham-based Quintiles is the world's biggest contract research organization, and more than ever, it's using its deep pockets to entwine itself with the pharmaceutical companies, fronting them cash and services for a piece of the profits once a drug is approved.
Quintiles, which was created in 1982, upped the ante last month, saying it wants to invest even more in potential drugs as pharmaceutical companies grapple with the down economy. Quintiles is hoping its new investments will produce enormous payoffs in the future, but the buffer between drug makers and testers are again blurred.
The FDA says there are well-established safeguards to protect the public.
Quintiles' decision to become more aggressive in taking investment risks comes at a time it's betting drug makers can use the resources it can offer, both cash and services.
"They're both currency for managing risk and having skin in the game," said Ron Wooten, a Quintiles executive vice president who heads the company's capital investment group.
The pharmaceutical industry has been changing rapidly in recent years as patents on blockbuster drugs expire, generic competitors multiply and research costs balloon. The credit crunch has piled on the pressure.
The payoffs for the risk of developing a drug can be huge.
In 2002, Quintiles took a chance on Eli Lilly and Co.'s antidepressant Cymbalta. Quintiles said it invested $125 million in cash, then spent another $400 million on a sales force of more than 550 after the product launch. Cymbalta is now Lilly's second-biggest drug. Quintiles said it's brought in more than $700 million so far for a stream of royalties lasting to 2012.
