Jefferies Global Healthcare Conference June 7, 2012 2012 PAREXEL International
Safe Harbor This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding future results and events, including, without limitation, statements regarding the Company s existing capital resources and future cash flows from operations, and statements regarding expected financial results, future growth and customer demand. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, intends, appears, estimates, projects, targets, and similar expressions are intended to identify forward-looking statements. These statements involve a number of risks and uncertainties. The Company s actual future results may differ significantly from the results discussed in the forward-looking statements contained in this presentation. Important factors that might cause such a difference include, but are not limited to, risks associated with: actual operating performance; actual expense savings and other operating improvements resulting from restructurings; the loss, modification, or delay of contracts; the Company s dependence on certain industries and clients; the Company s ability to win new business, manage growth and costs, and attract and retain employees; the Company s ability to complete additional acquisitions and to integrate newly acquired businesses or enter into new lines of business; government regulation of the drug, medical device and biotechnology industry; consolidation within the pharmaceutical industry; competition within the biopharmaceutical services industry; the potential for significant liability to clients and third parties; the potential adverse impact of health care reform; and the effects of exchange rate fluctuations and other international economic, political, and other risks. Such factors and others are discussed more fully in the section entitled Risk Factors of the Company s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 as filed with the SEC on May 10, 2012. The forward-looking statements included in this presentation represent the Company s estimates as of the date of this presentation. The Company specifically disclaims any obligation to update these forward-looking statements in the future. These forward-looking statements should not be relied upon as representing the Company s estimates or views as of any date subsequent to the date of this presentation. This presentation includes references to non-gaap financial measures. These non-gaap measures are not prepared in accordance with generally accepted accounting principles. Pro forma information is not meant to be considered superior to or a substitute for the Company s results of operations prepared in accordance with GAAP. A reconciliation of the non- GAAP financial measures to the most directly comparable GAAP measures is available on certain slides of this presentation.
Agenda PAREXEL Today Market Dynamics PAREXEL Growth Opportunities Recent Performance
Agenda PAREXEL Today Market Dynamics PAREXEL Growth Opportunities Recent Performance
PAREXEL today Strongly Positioned in A Growing Market Leader in strategic outsourcing Leveraging global infrastructure to improve margins as business scales New business and backlog position PAREXEL for continued growth in revenue and profitability
PAREXEL today Largest Global Footprint Among Public CROs Canada, Mexico, United States Austria, Belarus, Belgium, Bosnia, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Hungary, Ireland, Italy, Israel, Latvia, Lithuania, The Netherlands, Norway, Poland, Romania, Russia, Serbia, Slovakia, Spain, Sweden, Ukraine, United Kingdom Argentina, Brazil, Chile, Colombia, Ecuador, Peru South Africa Australia, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam
PAREXEL today Clinical Trial Process Expertise: Phases I-IV Clinical Research Services Project Management Site Management Patient and Investigator Recruitment Data Management Biostatistics Bioanalysis Medical Services Clinical Logistics Services
PAREXEL today Product Development Expertise: Consulting and Medical Communications Services (PCMS) Product Development Consulting Commercialization Consulting Medical Communications Consulting
PAREXEL today World Leader in eclinical Technology Perceptive Informatics Clinical Trial Management System (CTMS) Randomization and Trial Supply Management (RTSM) Medical Imaging (MI) Electronic Data Capture (EDC) Electronic Patient Reported Outcomes (epro)
PAREXEL today Diversified Client Base Supporting 2,125+ trials in 20 therapeutic areas Role in developing approximately 90% of the top 200 selling biopharmaceuticals on the market Representative customers Pharmaceutical Companies* Top 50 Global Biotechs* Top 10 Small and Mid-sized Biopharmas* 100 s * As ranked by revenue
Agenda PAREXEL Today Market Dynamics PAREXEL Growth Opportunities Recent Performance
Market dynamics Key Growth Drivers Outsourcing of Biopharma R&D Shift to Strategic Partnerships Impact of Emerging Markets Migration to eclinical Technology
Market dynamics Growing Biopharma R&D Spend Global R&D Spend ($B) $140 $120 $114 $116 $117 $122 $127 $132 $100 $80 $60 $40 $20 $0 2010E 2011E 2012E 2013E 2014E 2015E E = Estimate Source: William Blair & Company, April 2012
Market dynamics Increasing Market Size and Outsourcing Penetration Post-blockbuster R&D model Worldwide patient recruitment $25 Estimated CRO Market Size: Phase I-IV only ($B) 35 Phase I-IV Weighted Average Outsourcing Penetration $20 $15 $13.1 $13.8 $14.9 $16.4 $18.2 $20.4 30 27.0% 29.2% 31.9% $10 $5 25 22.5% 23.3% 25.2% $0 20 E = Estimate Source: William Blair & Company, April 2012
# of Projects Market dynamics Share of Projects in the R&D Pipeline Originated By Top 25 Sponsors 12,000 82.5% 10,000 8,000 81.6% 82.0% 81.5% 81.0% 6,000 80.4% 80.5% 80.0% 4,000 2,000 79.7% 79.5% 79.5% 79.0% 78.5% 0 78.0% 2007 2008 2009 2010 Top 25 Sponsors All Other Sponsors % Small and Mid-sized Biopharmas Notes: Top 25 Sponsors per Pharmaprojects database defined as the 25 sponsors with the largest number of active projects in a given year. Projects are allocated to Sponsor Group based upon originating sponsor, rather than current sponsor. Sources: Pharmaprojects Pharma R&D Annual Review 2007-2010
Market dynamics Shift to Strategic Outsourcing Expertise is a critical competitive differentiator for CROs Functional outsourcing Transactional outsourcing Preferred provider Strategic Outsourcing CRO paid for inputs CRO paid for activities CRO paid for efficiently delivering clinical data sets and solutions
Market dynamics Emerging Markets are a Growth Driver CRO market for clinical services in Asia Pacific estimated to grow at a CAGR of 20% (1) India China Japan Portion of global clinical trials expected to grow from 2% in 2007 to 5% in 2012 (2) Outsourced clinical research market grew 26% from 2009 to 2010 (3) Number of INDs for Investigational New Drugs grew 100% from 2003 to 2008 (4) 1 Source: Frost and Sullivan, 11/08/10 2 Source: Market research firm RNCOS 3 Source: Frost & Sullivan analysis, ChinaTrials 2008 conference 4 Source: JPMA Databook 2010; Yakumu Koho
Market dynamics Adoption of eclinical Technology Globalization of clinical trials Complexity of clinical trials eclinical Technology Demand for efficiency
Agenda PAREXEL Today Market Dynamics PAREXEL Growth Opportunities Recent Performance
PAREXEL growth opportunities Expanding Our Pipeline of Strategic Partnerships Publicly-announced strategic partnerships
PAREXEL growth opportunities Partner Benefits Faster cycle time Efficiently delivered high quality Alignment of incentives Improved communication
PAREXEL growth opportunities Delivering a Robust eclinical Suite Converging best-in-class applications to deliver clients a seamless, highly optimized experience through a software-as-a-service model RTSM Imaging CTMS Integrated eclinical Solution EDC epro
PAREXEL growth opportunities Driving eclinical Revenue and Margin $200 $180 $160 $140 $120 $100 $80 Perceptive Service Revenue (dollars in millions) $73 $89 $125 $139 $159 $187-$188 50% 45% 40% 35% 30% 25% 20% Perceptive Gross Margin 43.6% 44.2% 41.7% 42.7% 36.0% 40.0% $60 15% $40 10% $20 5% $0 FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E* 0% FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E* *E = Estimate
PAREXEL growth opportunities Building on Our Experience Serving Small- and Mid-sized Biopharmas Small- and mid-sized biopharmas own more than 60% of IP $60,000 $50,000 Total Biotech Funding (dollars in millions) $59.0 $55.9 $47.1 $44.3 $50.0 Large pharmas targeting key therapeutic areas and novel compounds already in development $40,000 $30,000 $20,000 $34.9 $30.1 Allows them to scale back internal infrastructure $10,000 $0 2005 2006 2007 2008 2009 2010 2011E E = Estimate Source: Burrill & Co. and company estimates
PAREXEL growth opportunities Establishing a Leading Position in the Asia-Pacific Region Our Asia-Pacific footprint includes 20 locations in 12 countries Drivers Australia, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam Globalization of clinical trials Growth of Asia Pacific pharmas
PAREXEL growth opportunities Capitalizing on Our Asia-Pacific Presence Serving Western clients interested in running trials in Asia and Asian clients interested in running trials globally 16% 14% 12% Percent of PAREXEL s Revenue Generated in Asia Pacific 11.8% 14.0% 15.0% Depth of regulatory expertise and site knowledge 10% 8% 6% 7.4% 9.1% Industry-leading Japan + Asia offering 4% 2% 0% FY'08 FY'09 FY'10 FY'11 9 mths FY'12
PAREXEL growth opportunities Optimizing the Profitability of Our Global Assets Early Phase business improvements Organically sourced eclinical technology Standardized best practices Work allocated to low-cost locations Enhanced client support Robust operational processes and IT systems
Agenda PAREXEL Today Market Dynamics PAREXEL Growth Opportunities Recent Performance
Recent performance Strong and Improving Net New Business* $2,000 $1,800 Net new business (dollars in millions) $1,736 CAGR 13.5% $1,835 $1,850 $1,600 $1,400 $1,200 $1,000 $976 $1,036 $1,422 $1,202 $800 $600 $400 $200 $- FY'06 FY'07 FY'08 FY'09 FY'10 FY'11 YTD FY'12 As of 3/31/12 * Net new business equates to gross new business less cancellations
Recent performance Significant Backlog Growth $4,500 Backlog (dollars in millions) CAGR 25.8% $4,223 $4,000 $3,500 $3,444 $3,000 $2,500 $2,000 $1,500 $1,000 $1,094 $1,507 $2,059 $2,176 $2,681 $500 $0 FY'06 FY'07 FY'08 FY'09 FY'10 FY'11 3/31/12
Recent performance Service Revenue Growth $1,800 Service revenue (dollars in millions) CAGR 14.5% $1,625 -$1,655 $1,600 $1,400 $1,200 $1,000 $964 $1,051 $1,131 $1,212 $1,380 - $1,385 $800 $600 $615 $742 $400 $200 $0 FY'06 FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E FY'13E E = Estimate
Recent performance Operating Margin Expansion Operating margin 10% 9% 8% 7% 6.6%* 7.8% 8.9%* 8.6%* 9.1%* 7.4%* 7.1-7.2%* range 8.0 8.5% range 6% 5% 4% 3% 2% 1% 0% FY'06 FY'07 FY'08 FY'09 FY'10 FY'11 FY'12E FY'13E * Adjusted numbers which exclude the impact of special items as detailed in press releases E = Estimate
Recent performance Earnings Per Share $1.50 $1.31 - $1.47 $1.35 $1.20 $1.05 $1.08 $0.95 $1.03 - $1.05 $1.04 - $1.06 $0.90 $0.75 $0.60 $0.68 $0.82 $0.71 $0.81 GAAP EPS Adjusted EPS* $0.45 $0.30 $0.15 $0.00 FY'09 FY'10 FY'11 FY'12E FY'13E * FY 09 adjusted numbers exclude a $15 million reserve for wind-down costs and bad debt expense related to a client s default on a contract, and a related $7.1 million tax benefit. FY 10 adjusted numbers exclude restructuring-related charges, special charges, the release of a reserve, and associated taxes. FY 11 adjusted numbers exclude restructuring-related and special items. FY 12E adjusted numbers exclude restructuring and related charges. E = Estimate
Recent performance The PAREXEL Advantage Market Positioning Performance Impact of emerging markets Rising clinical outsourcing penetration partnerships Adoption of eclinical IT Leading clinical CRO eclinical business growing rapidly Strong Asia Pacific presence Healthy backlog and new business trends Margin expansion under way