Drug patents' limited shelf life - 17 years in the US - means pharmaceutical companies are constantly racing the clock to get new products to market. Conflicting international regulations don't make the task any easier. Increasingly, the big pharmcos are buying help from contract research organizations (CROs), which specialize in testing new drug products (see "Smart Pharmer," page 81).
If you've got a hot new pill prospect, the reasons to use CROs are clear. Because they already have the right equipment and up-to-the-minute regulatory know-how, CROs can often complete tests half a year sooner and 15 to 25 percent cheaper than firms like Merck or Glaxo, according to Arda Minocherhomjee, a health-care investment analyst at William Blair & Company.
Minocherhomjee's CRO favorites include Covance (CVD) and Quintiles Transnational (QTRN), whose 1997 sales of more than US$800 million make it the industry's titan. Analysts following QTRN expect it to earn $1.02 per share this year, up 36 percent from 1997 - a rate they think it can sustain for the next five years.
NEW MONEY
Testing, Testing
