Venn Life Sciences (LSE:VENN) Chief Executive Officer Tony Richardson caught up with DirectorsTalk for an exclusive interview to discuss their leading edge in the industry and their expansion plans for Europe.
Q1: Could you please explain to us the mysterious world of clinical research organisation and why you have a leading edge in this area
A1: The clinical research basis is a well-developed industry at this stage, driven largely by pharmaceutical companies and bio-technology companies outsourcing their clinical trial requirements and this is a well-established pattern at this stage so as research and development grows and investment money flow into that sector, the demand for clinical trial services and outsource services grows and has grown year on year for the past 20 years.
Q2: Is this merely trying to save money or convenient to use your services or people like you?
A2: Yes, it’s largely more convenient. It gives them flexibility in terms of conducting clinical trials which can be up and down in terms of frequency so it makes no sense for them to go building internal fixed capability that may be turned on one year and turned off the next so outsourcing this makes a lot of sense from a cost-management prospective for pharmaceutical and bio-technology companies.
Q3: There seems to be, from an outsider’s prospective, something of a boom in the bio-tech area, in drug development we hear that there’s new antibiotics coming on stream possibly to save the world. Is this something that is helping you?
A3: Absolutely. Where we’re positioned as a business, we’re still a relatively young company. We’ve got about 100 people in the company, that kind of defines our capability in terms of size of projects and business we can take on. We’re well suited to bio-technology companies for example who are looking to do phase 2 studies, there’s been a significant influence into that sector, that drives the sector and it drives new business for us. Pharmaceutical pipelines remain under pressure so there’s a real continuous drive to develop new technologies and new products and that all bodes well for us.
Q4: In terms of the business model, the income stream or revenue stream and visibility on earnings, is that disproportionately favourable in terms of your exposure to the sector?
A4: Yes, we kind of operate in a very regulated environment, it’s all contract driven and contract based so once you secure a project, typically they’ll run between 24-26 months, it gives you pretty good visibility in terms of what you’re revenues will look like for that period. Contract cancellations in the sector tend to be rather low so once you’re winning business, you’re building what we call backlog, that’s contract revenue into the future so forecasting becomes a little bit easier.
Q5: If someone was interested in the bio-tech sector but thought it was a bit too volatile to invest directly, they would use you as a proxy for a perceived growth in that area of the market?
A5: Yes absolutely. We’re in healthcare, I’d say we were relatively low risk healthcare but the fortunes of our sector will rise or fall to some extent depending on how the bio-technology sector is performing and is being funded so that’s a reasonable statement.
Q6: Looking forward to 2015, what are the main event that you foresee for your company?
A6: We had a very strong second half of 2014, we booked about 1 million euros of new business per month, all of which was announced so that kind of represented a significant step change for our business in terms of the scale of projects we’re taking on. We expect to see that continue into 2015 and that will be the main thing to look out for. We’ve been acquisitive in the past, we’ve acquired some relatively small companies in Western Europe, really to build out capability and give our clients a fuller service in terms of geographic coverage and depth of service so we plan to continue that into 2015. Also, we’d like to expand further into Central and Eastern Europe and fill out the European picture for our clients.
