ITEM 1.BUSINESS
General
PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading contract research and medical marketing services organization providing a broad spectrum of services from first-in- human clinical studies through product launch to the pharmaceutical, biotechnology, and medical device industries around the world. The Company's primary objective is to help clients quickly obtain the necessary regulatory approvals of their products and, ultimately, optimize the market penetration of those products. Over the past fifteen years, PAREXEL has developed significant expertise in disciplines supporting this strategy. The Company's service offerings include: clinical trials management, data management, biostatistical analysis, medical marketing, clinical pharmacology, regulatory and medical consulting, performance improvement, industry training and publishing, and other drug development consulting services. The Company believes that its integrated services, therapeutic area depth, and sophisticated information technology, along with its experience in global drug development and product launch services, represent key competitive strengths.
The Company complements the research and development ("R&D") and marketing functions of pharmaceutical and biotechnology companies. Through its high quality clinical research and product launch services, PAREXEL helps clients maximize the return on their significant investments in research and development by reducing the time and cost of clinically testing their products and launching those products into the commercial marketplace. Clients are provided with a variable cost alternative to the fixed costs associated with internal drug development and product marketing by outsourcing these types of services. Clients no longer need to staff to peak periods and can benefit from PAREXEL's technical resource pool, broad therapeutic area expertise, global infrastructures designed to expedite parallel, multi-country clinical trials, and other advisory services focused on accelerating time-to-market. The Company believes it is unique in its vision to tightly integrate and build critical mass in the complementary businesses of clinical research and medical marketing. The Company believes there are significant synergies and efficiencies that can be realized in the transition from research to marketing creating opportunities to add value for clients in their efforts to get more products than they can internally manage into a worldwide market as expediently and cost effectively as possible.
The Company believes it is the third largest contract research organization in the world (based upon annual net revenue). Headquartered near Boston, Massachusetts, the Company has more than 45 offices and 3,700 employees throughout 25 countries. The Company has established footholds in the major health care markets around the world, including the United States, Japan, Germany, the United Kingdom ("U.K."), France, Italy, Spain, Sweden, Australia, Israel, Norway, Holland, and Eastern Europe, including Russia, Poland, Czech Republic, Lithuania and Hungary. The Company believes it is the second largest clinical CRO in both Europe and Japan. During fiscal 1998, PAREXEL derived 41% of its revenue from its international operations, distinguishing the Company from many of its competitors.
The Company, a Massachusetts corporation, was co-founded in 1983 as a regulatory consulting firm by Josef H. von Rickenbach, Chairman of the Board, President, and Chief Executive Officer of PAREXEL. Since that time, the Company has executed a focused growth strategy embracing aggressive internal expansion, as well as strategic acquisitions to expand or enhance the Company's portfolio of services, geographic presence, therapeutic area knowledge, information technology, and client relationships. Acquisitions have been and will continue to be an important component of PAREXEL's growth strategy.
During fiscal 1998, the Company significantly enhanced its global competitive position through a number of acquisitions. In March 1998, PAREXEL acquired several European-based companies, significantly expanding its critical mass, presence, and capabilities across Europe. These companies include: PPS Europe Limited ("PPS") and Genesis Pharma Strategies Limited ("Genesis"), leading marketing and clinical communications firms based in the U.K. and servicing the international pharmaceutical industry; MIRAI, B.V. ("MIRAI"), a full-service, pan-European contract research organization based in the Netherlands; and LOGOS GmbH ("LOGOS"), a regulatory affairs consulting firm in Freiberg, Germany, that specializes in dossier preparation and marketing approval submissions. With these acquisitions, PAREXEL has substantially reinforced its core clinical research and consulting capabilities across Eastern, Central, and Northern Europe, thereby solidifying its position of strength as one of the few truly global contract research and medical marketing organizations. In December 1997, the Company acquired Kemper- Materson, Inc., ("KMI"), a leading regulatory consulting firm based in Massachusetts, which enhances PAREXEL's ability to provide expertise and technical advisory services within the laboratory and manufacturing environments. All of these acquisitions involved exchanges of PAREXEL common stock and were accounted for as poolings of interests for financial reporting purposes.
Industry Overview
The CRO industry provides independent product development and related services on an outsourced basis to the pharmaceutical, biotechnology, and medical device industries. Although outsourcing by client companies is occurring throughout the product life cycles of pharmaceutical and biological products, CROs today still derive a significant portion of their revenue from the research and development expenditures of pharmaceutical and biotechnology companies. The CRO industry has evolved from providing limited clinical services in the 1970s to an industry which currently offers a full range of services that encompass the research, development and commercialization processes, including discovery, pre-clinical evaluations, study design, clinical trial management, data collection and management, biostatistical analysis, clinical formulation, packaging, manufacturing, laboratory testing, product registrations, medical marketing, contract sales, and other services. CROs are required to conduct services in accordance with strict regulations which govern clinical trials and the drug approval process.
The CRO industry is fragmented, with participants ranging from several hundred small, limited-service providers to several large full-service CROs with global operations. The Company believes there are significant barriers to becoming a full-service CRO with global capabilities. Some of these barriers include the development of broad therapeutic area knowledge and expertise in other technical areas, the infrastructure and experience necessary to serve the global demands of clients, the ability to simultaneously manage complex clinical trials in numerous countries, the expertise to prepare regulatory submissions in multiple countries, the development and maintenance of complex information technology systems required to integrate these capabilities, the establishment of solid working relationships with repeat clients, a strong history of financial performance, and capital funding to finance growth. In recent years, the CRO industry has experienced consolidation reflected in the acquisitions of smaller firms by larger, public CROs.
The CRO industry derives substantially all of its revenue from the pharmaceutical and biotechnology industries. The global pharmaceutical and biotechnology industries spent approximately $40 billion in 1997 on research and development, with an equal or greater amount spent on marketing and selling activities. Approximately $4 billion or more is estimated to have been outsourced to CROs, and the pharmaceutical outsourcing industry is projected to be growing 20 - 25% annually.
The Company believes that there are a number of positive macro trends driving the CRO industry's growth, including the following:
Drug Development Pressures. The Company believes that research and development expenditures have increased as a result of the constant pressure to develop product pipelines, and to respond to the demand for products for an aging population and for the treatment of chronic disorders and life- threatening conditions in such categories as infectious disease, central nervous system, cardiology and oncology. The development of therapies for chronic disorders, requires complex clinical trials to demonstrate the therapy's safety and effectiveness, and to determine if the drug causes any long- term side effects.
Globalization of Clinical Development and Regulatory Strategy. Pharmaceutical and biotechnology companies increasingly are attempting to maximize profits from a given drug by pursuing regulatory approvals in multiple countries simultaneously rather than sequentially, as was the practice historically. The Company believes that the globalization of clinical research and development activities has increased the demand for CRO services. A pharmaceutical or biotechnology company seeking approvals in a country in which it lacks experience or internal resources will frequently turn to a CRO for assistance in interacting with regulators or in organizing and conducting clinical trials. In addition, a company may turn to a CRO in the belief that regulatory authorities who are not familiar with the company may have more confidence in the results from tests independently conducted by a CRO known to those authorities.
Increasingly Complex and Stringent Regulation; Need for Technological Capabilities. Increasingly complex and stringent regulatory requirements throughout the world have increased the volume of data required for regulatory filings and escalated the demands on data collection and analysis during the drug development process. In recent years, the FDA and corresponding regulatory agencies of Canada, Japan and Western Europe have made progress in attempting to harmonize standards for preclinical and clinical studies and the format and content of applications for new drug approvals. Further, the FDA encourages the use of computer-assisted filings in an effort to expedite the approval process. As regulatory requirements have become more complex, the pharmaceutical and biotechnology industries are increasingly outsourcing to CROs to take advantage of their data management expertise, technological capabilities and global presence.
Competitive Pressures. Drug companies have been focusing on gaining market share and more efficient ways of conducting business because of pressures stemming from patent expirations, market acceptance of generic drugs, and efforts of regulatory bodies and managed care to control drug prices. The Company believes that the pharmaceutical industry is responding by centralizing the research and development process and outsourcing to variable cost CROs, thereby reducing the fixed costs associated with internal drug development. The CRO industry, by specializing in clinical trials management, is often able to perform the needed services with a higher level of expertise or specialization, more quickly and at a lower cost than the client could perform the services internally. The Company believes that some large pharmaceutical companies, rather than utilizing many CRO service providers, are selecting a limited number of full-service, global CROs to serve as their primary CROs.
Consolidation in the Pharmaceutical Industry. The pharmaceutical industry is consolidating as pharmaceutical companies seek to obtain cost reduction synergies through business combinations. Once consolidated, many pharmaceutical companies aggressively manage costs by reducing headcount and outsourcing to variable-cost CROs in an effort to reduce the fixed costs associated with internal drug development. The Company believes that full-service global CROs will benefit from this trend.
Growth of Biotechnology and Genomics Industries. The U.S. biotechnology industry has grown rapidly over the last ten years, and in recent years the genomics industry has emerged with strong growth potential. These companies are introducing significant numbers of new drug candidates which will require regulatory approval and, oftentimes, do not have the necessary experience or resources to conduct clinical trials, registrations, and product launches. Accordingly, many of these companies have chosen to outsource to CROs rather than expend significant time and resources to develop the necessary internal capabilities. Moreover, the biotechnology industry is rapidly expanding into and within Europe, providing significant growth opportunities for CROs with a global presence.
PAREXEL's Strategy
PAREXEL's intention is to maintain and enhance its position as a leading CRO by providing a full spectrum of integrated clinical research and medical marketing services on a global basis across key therapeutic areas. With an ongoing commitment to providing excellent client service and advancing safe and effective drug therapies, the Company draws on its specialized knowledge and expertise to aid clients in the expedition of drug development time, regulatory approval, and the market introduction of new products. In so doing, PAREXEL helps clients achieve an important objective, which is maximizing product revenues and profits over limited patent lives.
Central to PAREXEL's success has been the Company's focused strategy on building its platform of knowledge in the pursuit of outstanding client service. This includes a focus on its core clinical research business which has enjoyed significant growth; a focus on continuous process improvement, efficiency gains and leveraging internal expertise, resources and infrastructure; a focus on managing the Company's strong internal growth while augmenting the Company's knowledge base through strategic acquisitions; a focus on deeply and broadly penetrating key client accounts by offering a full spectrum of clinical development and medical marketing services; and always, a focus on outstanding quality and superior client service. During fiscal 1998, we made substantial progress in executing our consistently communicated strategy of adding breadth and depth of service within our three strategic business units, pursuing global expansion, and building on our therapeutic area, regulatory, and information technology expertise.
The Company's service philosophy involves a flexible approach which allows its clients to use the Company's services on an individual or bundled basis. The Company believes its expertise in conducting scientifically demanding trials and its ability to coordinate complicated global trials are significant competitive strengths. The Company continues to devote significant resources to developing innovative methodologies and sophisticated information systems designed to allow the Company to more effectively manage its business operations and deliver services to its clients. The Company has executed a focused growth strategy embracing aggressive internal expansion and strategic acquisitions to expand or enhance the Company's portfolio of services, geographic presence, therapeutic area knowledge, information technology, and client relationships.
PAREXEL has extended its strategic vision beyond product regulatory approval, to the rapid market penetration of clients' products. It is management's belief that there are significant efficiencies to be gained by tightening the integration between the R&D functions and the marketing and sales functions within client organizations, which will positively impact time-to- market. Given PAREXEL's core competencies in clinical research, the Company is well positioned to capitalize on peri-approval outsourcing opportunities within the pharmaceutical and biotechnology industries.
Serve the Global Model of New Drug Development
The Company believes that its ability to conduct clinical trials and other services worldwide enhances its ability to serve the increasingly global model of drug development. The Company provides clinical research and development services to major North American, European and Japanese pharmaceutical companies. The Company has expanded geographically primarily through internal growth, supplemented by strategic acquisitions, with a goal of serving all major client markets worldwide and positioning the Company to serve developing markets. Since January 1, 1994, the Company has established a presence in Kobe and Tokyo, Japan; Milan, Italy; Raleigh-Durham, NC; Sydney, Australia; Madrid, Spain; Tel Aviv, Israel; Washington, D.C.; Chicago, IL; Sheffield, U.K.; Stockholm, Sweden; The Netherlands, Norway, Poland, Lithuania, Hungary, Czechia, and Russia. During fiscal 1998, the Company acquired MIRAI, a leader in managing large, international, multi-center Phase II-IV clinical trials for pharma, biotech, and medical device clients in key therapeutic areas. MIRAI brings a well established presence and reputation in attractive, new locations for the Company, including Eastern Europe, Russia, and the Benelux, Nordic, and Baltic countries and maintains a Phase I alliance with TOHO, one of the largest Japanese pharmaceutical wholesalers and owner of the Tokyo Research Center of Clinical Pharmacology, which services to augment PAREXEL's Asia Pacific operations where we currently have offices in Kobe/Osaka and Tokyo.
PAREXEL is conducting a number of multinational clinical studies designed to pursue concurrent regulatory approvals in multiple countries. The Company believes that the expertise developed by conducting multi-jurisdictional clinical trials is a competitive advantage as pharmaceutical companies increasingly pursue regulatory approvals simultaneously in multiple jurisdictions.
The Company believes that the efficient delivery of high- quality clinical services requires adherence to standardized procedures on a worldwide basis. The Company has devoted considerable resources to developing internal standard operating procedures, including many internal checks and balances. These procedures, together with the Company's information technology, enable the Company to reduce the time involved in preparing regulatory submissions by concurrently compiling and analyzing large volumes of data from multinational trials and preparing regulatory submissions for filings on a global basis.
Address All Aspects of Clinical Research and Product Launch
The Company offers a full range of services that encompass the clinical research process, and will continue to build its medical marketing services supporting the commercial launch phase. The Company believes that its knowledge and experience in all stages of clinical research, as well as peri- and post-approval services surrounding product launch, enhance its marketability and credibility with clients. The Company's full range of services and global experience complement the R&D and marketing and sales functions of pharmaceutical and biotechnology companies. In order to meet the needs of specific clients, PAREXEL offers its services on either an individual or a bundled basis. This approach allows the Company to establish a relationship with a new client with the need for a particular service, which may in turn lead to larger, more comprehensive projects. This flexibility allows PAREXEL to deliver its services by operating autonomously or by working in close collaboration with its clients. In some cases, the Company has taken advantage of the flexibility of its information technology systems to gain direct access to client data on client systems. In addition, the Company provides regulatory periodicals, training materials and seminars and other complementary information products and services designed to meet its clients' demands for increased productivity in clinical development.
Conduct Scientifically Demanding Trials
The Company provides its services in connection with scientifically and clinically demanding trials in a wide range of therapeutic areas, such as trials involving the testing of drugs developed by biotechnology companies and drugs addressing complex diseases such as HIV/AIDS, cancer and Alzheimer's. The Company's leadership in HIV/AIDS-related therapeutic areas is evidenced by the selection of PAREXEL as the CRO for the Intercompany Collaborative for AIDS Drug Development, a consortium including 18 global leaders in AIDS research. Other therapeutic categories in which the Company has expertise include central nervous system ("CNS"), neurology, oncology, gastroenterology, endocrinology, cardiology, hematology, immunology, rheumatology and the study of pulmonary, reproductive and infectious diseases. The Company believes that as trials involve increasingly complex therapeutic areas, CROs with a broad range of experience have a competitive advantage over other companies with more limited capabilities.
Continue Investment in Information Technology
The Company believes that superior information technology is essential to enable a CRO to provide project services concurrently in multiple countries, expand its geographic operations to meet the global needs of the pharmaceutical and biotechnology industries and provide innovative services designed to expedite the clinical trials process. The Company has an extensive and effective global information technology network and believes that its information technology provides it with a significant competitive advantage. The Company's information technology supports its global organizational structure by enabling all offices to exchange information with each other so that several offices worldwide can work simultaneously on a project. The global information technology network also allows the Company to track the progress of ongoing client projects and predict more accurately and quickly its future personnel needs to meet client contract commitments. In addition, the Company's open and flexible information technology system can be adapted to the multiple needs of different clients and regulatory systems. For example, the system enables the Company to reduce the time involved in preparing regulatory submissions by concurrently compiling and analyzing large volumes of data from multinational trials and preparing regulatory submissions for filings on a global basis. This system also enables the Company to respond quickly to client inquires on the progress of projects and, in some cases, to gain direct access to client data on client systems.)
Services
The Company believes that there are outsourcing opportunities throughout the drug development process, and the Company will continue to actively seek ways to leverage its drug development expertise throughout the product lifecycle to assist clients in achieving their development and commercial goals. Today, the Company provides a full continuum of outsourced services to the pharmaceutical and biotechnology industries ranging from first-in- human clinical studies through a product's launch into the commercial marketplace.
Over the past fifteen years, PAREXEL has developed significant expertise in disciplines which support clients' efforts to accelerate the development and market introduction of their products. Specifically, PAREXEL offers such services as: clinical trials management, data management, biostatistical analysis, medical marketing, clinical pharmacology, regulatory and medical consulting, performance improvement, industry training and publishing, and other drug development consulting services. The Company's integrated services, therapeutic area depth, and sophisticated information technology, along with its experience in global drug development and product launch services, represent key competitive strengths.
PAREXEL has internally organized its operations into three interactive business units, namely: Contract Research Services, Medical Marketing Services and the Consulting Group.
Contract Research Services ("CRS")
Clinical Trials Management, Biostatistical and Data Management and related medical services comprise the Company's Drug Development business unit, which represents approximately 65% of the Company's fiscal 1998 revenue base.
Clinical Trials Management Services
PAREXEL offers complete services for the design, initiation and management of clinical trial programs, a critical element in obtaining regulatory approval for drugs. The Company has performed services in connection with trials in most therapeutic areas, including, but not limited to, cardiovascular, central nervous system, infectious disease, AIDS/HIV, neurology, oncology, gastroenterology, endocrinology, hematology, immunology, rheumatology, pulmonary, and reproductive diseases. PAREXEL's multi-disciplinary clinical trials group examines a product's existing preclinical and clinical data to design clinical trials to provide evidence of the product's safety and efficacy.
PAREXEL can manage every aspect of clinical trials, including study and protocol design, placement, initiation, monitoring, report preparation and strategy development. See "Government Regulation." Most of the Company's clinical trials management projects involve Phase II or III clinical trials, which are generally larger, longer and more complex than Phase I trials.
Clinical trials are monitored for and with strict adherence to good clinical practices ("GCP"). The design of efficient Case Report Forms ("CRF"), detailed operations manuals and site visits by PAREXEL's clinical research associates ensure that clinical investigators and their staff follow the established protocols of the studies. The Company has adopted standard operating procedures which are intended to satisfy regulatory requirements and serve as a tool for controlling and enhancing the quality of PAREXEL's worldwide clinical services.
Clinical trials represent one of the most expensive and time- consuming parts of the overall drug development process. The information generated during these trials is critical for gaining marketing approval from the FDA or other regulatory agencies. PAREXEL's clinical trials management group assists clients with one or more of the following steps:
Study Protocol Design. The protocol defines the medical issues the study seeks to examine and the statistical tests that will be conducted. Accordingly, the protocol defines the frequency and type of laboratory and clinical measures that are to be tracked and analyzed. The protocol also defines the number of patients required to produce a statistically valid result, the period of time over which they must be tracked and the frequency and dosage of drug administration. The study's success depends on the protocol's ability to predict correctly the requirements of the regulatory authorities.
Case Report Form Design. Once the study protocol has been finalized, case report forms must be developed. The CRF is the critical source document for collecting the necessary clinical data as dictated by the study protocol. The CRF may change at different stages of a trial. The CRFs for one patient in a given study may consist of 100 or more pages.
Site and Investigator Recruitment. The drug is administered to patients by physicians, referred to as investigators, at hospitals, clinics or other locations, referred to as sites. Potential investigators may be identified and solicited by the drug sponsor or the CRO. The trial's success depends on the successful identification and recruitment of experienced investigators with an adequate base of patients who satisfy the requirements of the study protocol. The Company has access to several thousand investigators who have conducted clinical trials for the Company. The Company will also provide additional services at the clinical investigator site to assist physicians and expedite the clinical research process.
Patient Enrollment. The investigators, usually with the assistance of CRO's, find and enroll patients suitable for the study. The speed with which trials can be completed is significantly affected by the rate at which patients are enrolled. Prospective patients are required to review information about the drug and its possible side effects, and sign an informed consent form to record their knowledge and acceptance of potential side effects. Patients also undergo a medical examination to determine whether they meet the requirements of the study protocol. Patients then receive the drug and are examined by the investigator as specified by the study protocol. Investigators are responsible for administering drugs to patients, as well as examining patients and conducting necessary tests.
Study Monitoring and Data Collection. As patients are examined and tests are conducted in accordance with the study protocol, data are recorded on CRFs. CRF's are collected from study sites by specially trained persons known as monitors. Monitors visit sites regularly to ensure that the CRFs are completed correctly and that all data specified in the protocol are collected. The monitors take completed CRFs to the study coordinating site, where the CRFs are reviewed for consistency and accuracy before their data is entered into an electronic database. The Company believes remote date entry ("RDE") and optical character recognition (OCR) scanning technologies are significantly enhancing both the quality and timeliness of clinical data collection with significant efficiency savings. (See Advanced Technology Group below.) The Company's study monitoring and data collection services comply with the FDA's adverse events reporting guidelines.
Clinical Data Management and Biostatistical Services. (See below)
Report Writing. The findings of statistical analysis of data collected during the trial together with other clinical data are included in a final report generated for inclusion in a regulatory document.
Medical Services. Throughout the course of a development program, PAREXEL's physicians provide a wide range of medical research and consulting services to improve the speed and quality of clinical research, including medical supervision of clinical trials, compliance with medical standards and safety regulations, medical writing, medical imaging, strategy development, and portfolio management.
Clinical Data Management and Biostatistical Services
PAREXEL's data management professionals assist in the design of CRFs, as well as training manuals for investigators, to ensure that data are collected in an organized and consistent format in compliance with the study protocol. Databases are designed according to the analytical specifications of the project and the particular needs of the client. Prior to data entry, PAREXEL personnel screen the data to detect errors, omissions and other deficiencies in completed CRFs. The use of RDE and OCR technologies, to gather and report clinical data, expedites data exchange while minimizing data collection errors as a result of more timely data integrity verification. The Company provides clients with data abstraction, data review and coding, data entry, database verification and editing and problem data resolution.
The Company has extensive experience throughout the world in the creation of scientific databases for all phases of the drug development process, including the creation of customized databases to meet client-specific formats, integrated databases to support New Drug Application submissions and databases in strict accordance with FDA and European specifications.
PAREXEL's biostatistics professionals assist clients with all phases of drug development, including biostatistical consulting, database design, data analysis and statistical reporting. These professionals develop and review protocols, design appropriate analysis plans and design report formats to address the objectives of the study protocol as well as the client's individual objectives. Working with the programming staff, biostatisticians perform appropriate analyses and produce tables, graphs, listings and other applicable displays of results according to the analysis plan. Frequently, biostatisticians represent clients during panel hearings at the FDA.
Advanced Technology Group
Information technology is integral to the clinical research process. PAREXEL has technical experts which consult externally with clients, as well as internally with Drug Development, on ways to best utilize technology to expedite the development process. The Company currently offers an impressive portfolio of information technology tools including IRIS Electronic Data Capture, Medical Imaging, Sitebase Remote Data Entry, IVRS, Internet reporting, telemedicine applications, computer-based training programs, and other similar products that can be customized to our clients' needs. The Advanced Technology Group continues to identify and support new technologies to benefit clients as well as our internal process businesses.
Medical Marketing Services ("MMS")
During fiscal 1998, the Company significantly enhanced its breadth of services in the medical marketing arena and added managerial talent and depth through the acquisition of PPS. This was an important step in the execution of PAREXEL's strategy to assist clients in achieving optimal market penetration for their products by providing customized, integrated and expertise-based product development and product launch services around the world. PPS, with its strong foothold in Europe, transforms our MMS business into a global provider of product launch support services to the international pharmaceutical industry. PPS has nearly doubled the size of our MMS business to over $50 million of annual revenue, making us one of the largest global medical marketing services organizations in the world.
Various pressures on the pharmaceutical industry have resulted in a greater focus on quickly moving more compounds from clinical development into the marketplace in order to maximize revenues and profits over limited patent lives. The move into medical marketing services in response to client demand has been a natural progression for PAREXEL, and one that draws upon the Company's core competencies in clinical research.
The Company's experience indicates that clients need assistance in creating awareness of products in the marketplace and in addressing the technical aspects of launching their products, especially managing the simultaneous launch of numerous products. MMS provides comprehensive, value-added pre-and post- launch services, including market development, product management, and targeted communications support to leading pharmaceutical and biotechnology companies throughout the U.S. and Europe. It specializes in gathering, analyzing, and interpreting scientific data for delivery of customized messages to targeted audiences. Detailed services include market planning and analysis, strategic consulting, product profiling and positioning, branding, pricing and reimbursement consulting, patient studies, health economics, scientific writing and publishing of medical texts and journals, management of international physician symposia, accredited continuing medical education (CME) and training programs, promotional material production, and multimedia communications including Intranet and Internet development.
Consulting Group
The Company offers a number of consulting and advisory services in support of the product development and product marketing processes. This group brings together experts from relevant disciplines focused on shaping meaningful solutions and helping clients make the best business decisions with respect to their product development and marketing strategies. This group also serves as a valuable resource for the Company's internal operations. PAREXEL's Consulting Group includes Regulatory Affairs, Clinical Pharmacology and our Information Products Division.
Regulatory Affairs
PAREXEL provides comprehensive regulatory product registration services for pharmaceutical and biotechnology products in major jurisdictions in North America, Europe, and Japan, including regulatory strategy formulation, document preparation and review, quality assurance, and liaison with the FDA and other regulatory agencies. In addition, the Company provides the services of qualified experts to assist with good manufacturing practices ("GMP") compliance in existing and new manufacturing plants, including system validation services. PAREXEL's staff provides on- site GCP and GMP training sessions and conducts internal and external quality control and quality assurance audits.
PAREXEL works closely with clients to devise regulatory strategies and comprehensive product development programs. The Company's regulatory affairs experts review existing published literature, assess the scientific background of a product, assess the competitive and regulatory environment, identify deficiencies and define the steps necessary to obtain registration in the most expeditious manner. Through this service, the Company helps its clients determine the feasibility of developing a particular product or product line.
Clinical Pharmacology
PAREXEL's clinical pharmacology services primarily include Phase I investigations and trial facilities, both for volunteers and patients. The Company's Clinical Pharmacology Unit in Berlin is one of the world's leading units for combined kinetic and dynamic studies. It provides state-of-the-art in- and out- patient facilities, and is staffed with a team of clinical pharmacology experts with extensive experience in both pharmacokinetics and pharmacodynamics. PAREXEL also maintains a clinical pharmacology research collaboration with Georgetown University Medical Center, referred to as the Georgetown/PAREXEL Clinical Pharmacology Research Unit ("CPRU"). This relationship provides PAREXEL exclusive access to the CPRU for purposes of conducting clinical pharmacology research employing a more flexible, variable-cost business model.
Information Products Group
The Company's Information Products Group ("IPG") offers a wide range of specialized clinical consulting, training, and publication services to the health care industry. PAREXEL/Barnett is a leader in providing conferences, educational materials, and management consulting services to the clinical research community, with extensive experience in organizational structure, curriculum design, and human resource management. The publications group produces several publications recognized throughout the industry covering regulatory and drug development matters.
PAREXEL/Barnett is also a leader in management consulting in the clinical research area, offering a wide range of solutions that help pharmaceutical and biotechnology companies improve their own in-house clinical performance. These services include performance benchmarking, process improvement, clinical research capacity analysis, and operational support services.
Information Systems
The Company is committed to investing in information technology designed to help the Company provide high quality services in a cost effective manner and to manage its internal resources. The Company believes it is one of a few CROs that has an extensive and effective global information technology network. The Company has built on its network by developing a number of proprietary information systems that address critical aspects of its business, such as project proposals/budget generations, time information management, revenue and resource forecasting, clinical data entry and management, and project management.
The Company's information systems group has hundreds of employees responsible for technology procurement, applications development and management of the Company's worldwide computer network. The wide area network links numerous local area networks, interconnecting over 3,700 computers worldwide. The Company's information systems are designed to work in support of and reinforce the Company's standard operating procedures. The Company's information technology system is open and flexible, allowing it to be adapted to the multiple needs of different clients and regulatory systems. This system also enables the Company to respond quickly to client inquiries on the progress of projects and, in some cases, to gain direct access to client data on client systems.
During fiscal 1998, the Company has been focused on strengthening its global information technology infrastructure and has made significant progress in the following areas: upgrading our global wide area network, particularly across Europe and Japan; upgrading our core data center hardware in North America to support increasing business volume; standardizing all worldwide desktops in terms of hardware and software; rolling out our new Oracle-based financial system and Clintrial supplemental tools; and preparing for the Year 2000. The Company feels that these initiatives will help prepare the organization for future workload demands and maintain our high standards of client service.
Year 2000
Information systems are an integral part of the services the Company provides. As such, the Company recognizes that it must ensure that its service and operations will not be adversely affected by Year 2000 software and equipment failures (the "Year 2000 Issue"), which can arise from the use of date-dependent systems that utilize only two digits to represent the year applicable to a transaction; for example, "98" to represent "1998" rather than the full four digits. Computer systems so engineered may not operate properly when the last two digits of the year become "00" as will occur on January 1, 2000.
The Company has initiated a four-phase program, led by its Chief Information Officer and a global, cross-functional team, to assess and remediate the effect of the Year 2000 Issue on the Company's operations. As part of this program, the Company is contacting its clients, principal suppliers, and other vendors to assess whether their Year 2000 Issues, if any, will affect the Company. This Company-wide effort began in 1997; and many Year 2000 dependencies have already been identified and addressed through planned systems and infrastructure evolution, replacement, or elimination. The continuing program described below is to assure that the Company identifies and addresses all remaining Year 2000 systems and dependencies well in advance of the millennium change.
The first phase of the program, conducting an inventory of all systems and dependencies that may be affected by the Year 2000 Issue, is substantially complete. The second phase of the program, the assessment and categorization of all the inventoried systems and dependencies by level of priority reflecting their potential impact on business continuation, is underway. Based on this prioritization, the third phase will be to develop detailed plans to address each Year 2000 Issue and a general contingency plan in the event that any noncompliant critical systems remain by January 1, 2000.
While the Company has not yet completed its full assessment of the scope of the Year 2000 Issue facing its systems and dependencies, based on our analysis to date, we do not believe that the costs to be incurred will be material. However, until the full analysis is complete, the Company is unable to provide assurance whether or not future costs will be material. Furthermore, as noted above, the Company is contacting its principal clients, suppliers, and other vendors concerning the state of their Year 2000 compliance. Until that effort is completed, the Company cannot be assured that those other systems are or will be Year 2000 compliant and is unable to estimate at this time the impact on the Company if one or more of those systems is not Year 2000 compliant. For the foregoing reasons, the Company is not able to provide assurance at this time whether the Year 2000 Issues will materially affect its future financial results or financial condition.
Sales and Marketing
PAREXEL's marketing strategy is to maintain excellent service- oriented relationships with its large and loyal client base, while expanding its base through strong global development initiatives. The Company's client relations professionals, senior executives and project team leaders all share responsibility for the maintenance of key client relationships and business development activities. The Company believes that its emphasis on developing close relationships with its clients leaves it well positioned to benefit from the trend among pharmaceutical companies to concentrate their outsourcing among fewer CROs.
The Company's marketing activities are coordinated by PAREXEL's client service executives located near clients throughout the world. In addition to significant selling experience, most of the Company's business development personnel have technical or scientific backgrounds in the pharmaceutical industry. The Company coordinates its worldwide marketing efforts through a computerized system that is integrated into each of the Company's locations.
Clients
During fiscal 1998, the Company provided services to most of the top 20 pharmaceutical and top 10 biotechnology companies. The Company performed services for hundreds of clients on over 2,000 projects during the year.
The Company has in the past derived, and may in the future derive, a significant portion of its net revenue from a core group of major projects or clients. Concentrations of business in the CRO industry are not uncommon and the Company is likely to experience such concentration in future years. In fiscal 1998, one client accounted for 12% of net revenue; in fiscal 1997 and 1996, no single customer accounted for more than 10% of net revenue. In fiscal 1998, 1997, and 1996, the Company's top five customers accounted for 34%, 36%, and 29%, respectively, of the Company's net revenue. The loss of business from a significant client could materially and adversely affect the Company's net revenue and results of operations.
Backlog
Backlog represents anticipated net revenue from awarded projects, including signed contracts, letter agreements, and certain verbal commitments, and signifies work not yet completed. Once work commences, revenue is generally recognized over the life of the contract, which usually lasts for twelve months or more. Backlog at June 30, 1998, was approximately $285 million.
The Company believes that its backlog as of any date is not necessarily a meaningful predictor of future results. Clinical studies under contracts included in backlog are subject to termination or delay. Clients terminate or delay contracts for a variety of reasons including, among others, the failure of products being tested to satisfy safety requirements, unexpected or undesirable clinical results of the product, the clients' decision to forego a particular study, insufficient patient enrollment or investigator recruitment or production problems resulting in shortages of the drug. Most of the Company's contracts are terminable upon 60 to 90 days' notice by the client. The Company typically is entitled to receive certain fees for winding down a study which is terminated or delayed and, in some cases, a termination fee.
Competition
The Company primarily competes against in-house departments of pharmaceutical companies, full service CROs, and, to a lesser extent, universities, teaching hospitals and other site organizations. Some of these competitors have greater capital, technical and other resources than the Company. CROs generally compete on the basis of previous experience, medical and scientific expertise in specific therapeutic areas, the quality of services, the ability to organize and manage large-scale trials on a global basis, the ability to manage large and complex medical databases, the ability to provide statistical and regulatory services, the ability to recruit investigators and patients, the ability to integrate information technology with systems to improve the efficiency of contract research, an international presence with strategically located facilities, financial viability and price. PAREXEL believes that it competes favorably in these areas.
The CRO industry is fragmented, with participants ranging from several hundred small, limited-service providers to several large, full-service CROs with global operations. PAREXEL believes that it is the third largest full-service CRO in the world, based on annual net revenue. Other large CROs include Quintiles Transnational Corporation, Covance Inc., and Pharmaceutical Product Development, Inc. The trend toward CRO industry consolidation, as well as pharmaceutical companies outsourcing to a fewer number of preferred CRO's, has resulted in heightened competition among the larger CROs for clients and acquisition candidates.
Intellectual Property
The Company believes that factors such as its ability to attract and retain highly-skilled professional and technical employees and its project management skills and experience are significantly more important to its business than are any intellectual property rights developed by it. PAREXEL has developed certain computer software and related methodologies that the Company has sought to protect through a combination of contracts, copyrights and trade secrets; however, the Company does not consider the loss of exclusive rights to any of this software or methodology to be material to the Company's business.
Employees
As of June 30, 1998, the Company had approximately 3,700 employees. Approximately 54% of the employees are located in North America and 46% are located throughout Europe and the Asia/Pacific region. The Company believes that its relations with its employees are good.
The success of the Company's business depends on its ability to attract and retain a qualified professional, scientific and technical staff. The level of competition among employers for skilled personnel, particularly those with Ph.D., M.D. or equivalent degrees, is high. The Company believes that its multinational presence, which allows for international transfers, is an advantage in attracting employees. In addition, the Company believes that the wide range of clinical trials in which it participates allows the Company to offer a broad experience to clinical researchers. While the Company has not experienced any significant difficulties in attracting or retaining qualified staff to date, there can be no assurance the Company will be able to avoid such difficulties in the future.
Government Regulation
Before a new drug may be approved and marketed, the drug must undergo extensive testing and regulatory review in order to determine that the drug is safe and effective. The stages of this development process are as follows:
Preclinical Research (1 to 3.5 years). In vitro ("test tube") and animal studies to establish the relative toxicity of the drug over a wide range of doses and to detect any potential to cause birth defects or cancer. If results warrant continuing development of the drug, the manufacturer will file an IND (Investigational New Drug Application), upon which the FDA may grant permission to begin human trials.
Clinical Trials (3.5 to 6 years)
Phase I (6 months to 1 year). Basic safety and pharmacology testing in 20 to 80 human subjects, usually healthy volunteers, includes studies to determine how the drug works, how it is affected by other drugs, where it goes in the body, how long it remains active, and how it is broken down and eliminated from the body.
Phase II (1 to 2 years). Basic efficacy (effectiveness) and dose-range testing in 100 to 200 afflicted volunteers to help determine the best effective dose, confirm that the drug works as expected, and provide additional safety data.
Phase III (2 to 3 years). Efficacy and safety studies in hundreds or thousands of patients at many investigational sites (hospitals and clinics) can be placebo-controlled trials, in which the new drug is compared with a "sugar pill," or studies comparing the new drug with one or more drugs with established safety and efficacy profiles in the same therapeutic category.
Treatment Investigational New Drug ("TIND") (may span late Phase II, Phase III, and FDA review). When results from Phase II or Phase III show special promise in the treatment of a serious condition for which existing therapeutic options are limited or of minimal value, the FDA may allow the manufacturer to make the new drug available to a larger number of patients through the regulated mechanism of a TIND. Although less scientifically rigorous than a controlled clinical trial, a TIND may enroll and collect a substantial amount of data from tens of thousands of patients.
New Drug Application ("NDA") Preparation and Submission. Upon completion of Phase III trials, the manufacturer assembles the statistically analyzed data from all phases of development into a single large document, the NDA, which today comprises, on average, roughly 100,000 pages.
FDA Review & Approval (1 to 1.5 years). Careful scrutiny of data from all phases of development (including a TIND) to confirm that the manufacturer has complied with regulations and that the drug is safe and effective for the specific use (or "indication") under study.
Post-Marketing Surveillance and Phase IV Studies. Federal regulation requires the manufacturer to collect and periodically report to FDA additional safety and efficacy data on the drug for as long as the manufacturer markets the drug (post-marketing surveillance). If the drug is marketed outside the U.S., these reports must include data from all countries in which the drug is sold. Additional studies (Phase IV) may be undertaken after initial approval to find new uses for the drug, to test new dosage formulations, or to confirm selected non-clinical benefits, e.g., increased cost- effectiveness or improved quality of life.
The clinical investigation of new drugs is highly regulated by government agencies. The standard for the conduct of clinical research and development studies comprises GCP, which stipulates procedures designed to ensure the quality and integrity of data obtained from clinical testing and to protect the rights and safety of clinical subjects. While GCP has not been formally adopted by the FDA nor, with certain exceptions, by similar regulatory authorities in other countries, some provisions of GCP have been included in regulations adopted by the FDA. Furthermore, in practice, the FDA and many other regulatory authorities require that study results submitted to such authorities be based on studies conducted in accordance with GCP.
The FDA's regulatory requirements have served as the model for much of the regulation for new drug development worldwide. As a result, similar regulatory requirements exist in the other countries in which the Company operates. The Company's regulatory capabilities include knowledge of the specific regulatory requirements in various countries, and the Company has managed simultaneous regulatory submissions in more than one country for a number of drug sponsors. Beginning in 1991, the FDA and corresponding regulatory agencies of Canada, Japan and Western Europe commenced discussions to develop harmonized standards for preclinical and clinical studies and the format and content of applications for new drug approvals. Data from multinational studies adhering to GCP are now generally acceptable to the FDA, Canadian and Western European regulators. Effective April 1, 1997, Japan officially adopted GCP and legitimized the use of CROs in conducting clinical research.
The services provided by PAREXEL are ultimately subject to FDA regulation in the U.S. and comparable agencies in other countries. The Company is obligated to comply with FDA requirements governing such activities as obtaining patient informed consents, verifying qualifications of investigators, reporting patients' adverse reactions to drugs and maintaining thorough and accurate records. The Company must maintain source documents for each study for specified periods, and such documents may be reviewed by the study sponsor and the FDA during audits. Non-compliance with GCP can result in the disqualification of data collected during a clinical trial.
Potential Liability and Insurance
PAREXEL's clinical research services focus on the testing of experimental drugs on human volunteers pursuant to a study protocol. Clinical research involves a risk of liability for personal injury or death to patients due, among other reasons, to possible unforeseen adverse side effects or improper administration of the new drug. PAREXEL does not provide healthcare services directly to patients. Rather, physician investigators are responsible for administrating drugs and evaluating patients. Many of these patients are already seriously ill and are at risk of further illness or death. The Company has not experienced any patient claims to date arising out of any clinical trial managed or monitored by it.
The Company believes that the risk of liability to patients in clinical trials is mitigated by various regulatory requirements, including the role of institutional review boards ("IRBs") and the need to obtain each patient's informed consent. The FDA requires each human clinical trial to be reviewed and approved by the IRB at each study site. An IRB is an independent committee that includes both medical and non-medical personnel and is obligated to protect the interests of patients enrolled in the trial. The IRB monitors the protocol and measures designed to protect patients, such as the requirement to obtain informed consent.
To reduce its potential liability, PAREXEL is generally successful in incorporating indemnity provisions into its contracts with clients and with investigators hired by the Company on behalf of its clients. These indemnities generally do not, however, protect PAREXEL against certain of its own actions, such as those involving negligence. Moreover, these indemnities are contractual arrangements that are subject to negotiation with individual clients, and the terms and scope of such indemnities can vary from client to client and from study to study. Finally, the financial performance of these indemnities is not secured, so that the Company bears the risk that an indemnifying party may not have the financial ability to fulfill its indemnification obligations. PAREXEL could be materially and adversely affected if it were required to pay damages or incur defense costs in connection with an uninsured claim that is outside the scope of an indemnity or where the indemnity, although applicable, is not performed in accordance with its terms.
The Company currently maintains an errors and omissions professional liability insurance policy. There can be no assurance that this insurance coverage will be adequate, or that insurance coverage will continue to be available on terms acceptable to the Company.
RISK FACTORS
In addition to the other information in this Registration Statement, the following risk factors should be considered carefully in evaluating the Company and its business. Information provided by the Company from time to time may contain certain "forward-looking" information, as that term is defined by (i) the Private Securities Litigation Reform Act of 1995 (the "Act") and (ii) in releases made by the Securities and Exchange Commission (the "SEC"). These risk factors are being provided pursuant to the provisions of the Act and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act.
Loss or Delay of Large Contracts. Most of the Company's contracts are terminable upon 60 to 90 days' notice by the client. Clients terminate or delay contracts for a variety of reasons, including, among others, the failure of products being tested to satisfy safety requirements, unexpected or undesired clinical results of the product, the client's decision to forego a particular study, such as for economic reasons, insufficient patient enrollment or investigator recruitment or production problems resulting in shortages of the drug. In addition, the Company believes that cost-containment and competitive pressures have caused pharmaceutical companies to apply more stringent criteria to the decision to proceed with clinical trials and, therefore, may result in a greater willingness of these companies to cancel contracts with CROs. The loss or delay of a large contract or the loss or delay of multiple contracts could have a material adverse effect on the financial performance of the Company.
Variability of Quarterly Operating Results. The Company's quarterly operating results have been subject to variation, and will continue to be subject to variation, depending upon factors such as the initiation, progress, or cancellation of significant projects, exchange rate fluctuations, the mix of services offered, the opening of new offices and other internal expansion costs, the costs associated with integrating acquisitions and the startup costs incurred in connection with the introduction of new products and services. Because a high percentage of the Company's operating costs are relatively fixed, variations in the initiation, completion, delay or loss of contracts, or in the progress of client projects can cause material adverse variations in quarterly operating results.
Dependence on Certain Industries and Clients. The Company's revenues are highly dependent on research and development expenditures by the pharmaceutical and biotechnology industries. The Company's operations could be materially and adversely affected by general economic downturns in its clients' industries, the impact of the current trend toward consolidation in these industries or any decrease in research and development expenditures. Furthermore, the Company has benefited to date from the increasing tendency of pharmaceutical companies to outsource large clinical research projects. A reversal or slowing of this trend would have a material adverse effect on the Company. In fiscal 1998, 1997, and 1996, the Company's top five clients accounted for 34% 36%, and 29%, respectively, of the Company's consolidated net revenue. In fiscal 1998, one client accounted for 12% of consolidated net revenue; however, in fiscal 1997 and 1996, no single customer accounted for more than 10% of net revenue. The loss of business from a significant client could have a material adverse effect on the Company.
Management of Business Expansion. The Company's business and operations have experienced substantial expansion over the past 15 years. The Company believes that such expansion places a strain on operational, human and financial resources. In order to manage such expansion, the Company must continue to improve its operating, administrative and information systems, accurately predict its future personnel and resource needs to meet client contract commitments, track the progress of ongoing client projects, and attract and retain qualified management, professional, scientific and technical operating personnel. Expansion of foreign operations also may involve the additional risks of assimilating differences in foreign business practices, hiring and retaining qualified personnel, and overcoming language barriers. In the event that the operation of an acquired business does not live up to expectations, the Company may be required to restructure the acquired business or write-off the value of some or all of the assets of the acquired business. Failure by the Company to meet the demands of and to manage expansion of its business and operations could have a material adverse effect on the Company's business.
Risks Associated with Acquisitions. The Company has made a number of acquisitions and will continue to review future acquisition opportunities. No assurances can be given that acquisition candidates will continue to be available on terms and conditions acceptable to the Company. Acquisitions involve numerous risks, including, among other things, difficulties and expenses incurred in connection with the acquisitions and the subsequent assimilation of the operations and services or products of the acquired companies, the diversion of management's attention from other business concerns and the potential loss of key employees of the acquired company. Acquisitions of foreign companies also may involve the additional risks of assimilating differences in foreign business practices and overcoming language barriers. In the event that the operations of an acquired business do not live up to expectations, the Company may be required to restructure the acquired business or write-off the value of some or all of the assets of the acquired business. There can be no assurance that any acquisition will be successfully integrated into the Company's operations.
Dependence on Government Regulation. The Company's business depends on the comprehensive government regulation of the drug development process. In the United States, the general trend has been in the direction of continued or increased regulation, although the FDA recently announced regulatory changes intended to streamline the approval process for biotechnology products by applying the same standards as are in effect for conventional drugs. In Europe, the general trend has been toward coordination of common standards for clinical testing of new drugs, leading to changes in the various requirements currently imposed by each country. Japan also legislated GCP and legitimatized the use of CRO's in April 1997. Changes in regulation, including a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, as well as anticipated regulation, could materially and adversely affect the demand for the services offered by the Company. In addition, failure on the part of the Company to comply with applicable regulations could result in the termination of ongoing research or the disqualification of data, either of which could have a material adverse effect on the Company.
Competition. The Company primarily competes against in-house departments of pharmaceutical companies, full service CROs, and, to a lesser extent, universities, teaching hospitals and other site organizations. Some of these competitors have greater capital, technical and other resources than the Company. CROs generally compete on the basis of previous experience, medical and scientific expertise in specific therapeutic areas, the quality of services, the ability to organize and manage large- scale trials on a global basis, the ability to manage large and complex medical databases, the ability to provide statistical and regulatory services, the ability to recruit investigators and patients, the ability to integrate information technology with systems to improve the efficiency of contract research, an international presence with strategically located facilities, financial viability and price. PAREXEL believes that it competes favorably in these areas.
The CRO industry is fragmented, with participants ranging from several hundred small, limited-service providers to several large, full-service CROs with global operations. Large CROs against whom PAREXEL competes include Quintiles Transnational Corporation, Covance Inc., and Pharmaceutical Product Development, Inc. The trend toward CRO industry consolidation has resulted in heightened competition among the larger CROs for clients and acquisition candidates. In addition, consolidation within the pharmaceutical industry, as well as pharmaceutical companies outsourcing to a fewer number of preferred CROs, has led to heightened competition for CRO contracts.
Potential Volatility of Stock Price. The market price of the Company's Common Stock could be subject to wide fluctuations in response to quarter-to-quarter variations in operating results, changes in earnings estimates by analysts, market conditions in the industry, prospects of health care reform, changes in government regulation and general economic conditions. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have been unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the market price of the Company's Common Stock. Because the Company's Common Stock currently trades at a relatively high price-earnings multiple, due in part to analysts' expectations of continued earnings growth, even a relatively small shortfall in earnings from, or a change in, analysts' expectations may cause an immediate and substantial decline in the Company's stock price. Investors in the Company's Common Stock must be willing to bear the risk of such fluctuations in earnings and stock price.
Potential Adverse Impact of Health Care Reform. Numerous governments have undertaken efforts to control growing health care costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. In the last several years, several comprehensive health care reform proposals were introduced in the U.S. Congress. The intent of the proposals was, generally, to expand health care coverage for the uninsured and reduce the growth of total health care expenditures. While none of the proposals were adopted, health care reform may again be addressed by the U.S. Congress. Implementation of government health care reform may adversely affect research and development expenditures by pharmaceutical and biotechnology companies, resulting in a decrease of the business opportunities available to the Company. Management is unable to predict the likelihood of health care reform proposals being enacted into law or the effect such law would have on the Company.
Many governments outside the U.S. have also reviewed or undertaken health care reform. The Company cannot predict the impact that any pending or future health care reform proposals may have on the Company's business in other countries.
Dependence on Personnel; Ability to Attract and Retain Personnel. The Company relies on a number of key executives, including Josef H. von Rickenbach, its President, Chief Executive Officer and Chairman, upon whom the Company maintains key man life insurance. Although the Company has entered into agreements containing non- competition restrictions with its senior officers, the Company does not have employment agreements with certain of these persons and the loss of the services of any of the Company's key executives could have a material adverse effect on the Company.
The Company's performance also depends on its ability to attract and retain qualified professional, scientific and technical operating staff. The level of competition among employers for skilled personnel, particularly those with M.D., Ph.D. or equivalent degrees, is high. There can be no assurance the Company will be able to continue to attract and retain qualified staff.
Potential Liability; Possible Insufficiency of Insurance. Clinical research services involve the testing of experimental drugs on consenting human volunteers pursuant to a study protocol. Such testing involves a risk of liability for personal injury or death to patients due to, among other reasons, possible unforeseen adverse side effects or improper administration of the new drug by physicians. Many of these patients are already seriously ill and are at risk of further illness or death. The Company could be materially and adversely affected if it were required to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnity or insurance coverage, or if the indemnity, although applicable, is not performed in accordance with its terms or if the Company's liability exceeds the amount of applicable insurance. In addition, there can be no assurance that such insurance will continue to be available on terms acceptable to the Company.
Adverse Effect of Exchange Rate Fluctuations. Approximately 41% of the Company's net revenue for fiscal 1998, 42% for fiscal 1997, and 48% for fiscal 1996 were derived from the Company's operations outside of North America. Since the revenue and expenses of the Company's foreign operations are generally denominated in local currencies, exchange rate fluctuations between local currencies and the United States dollar will subject the Company to currency translation risk with respect to the results of its foreign operations. To the extent the Company is unable to shift to its clients the effects of currency fluctuations, these fluctuations could have a material adverse effect on the Company's results of operations. The Company does not currently hedge against the risk of exchange rate fluctuations.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock. The Company's Restated Articles of Organization and Restated By- Laws contain provisions that may make it more difficult for a third party to acquire, or may discourage a third party from acquiring, the Company. These provisions could limit the price that certain investors might be willing to pay in the future for shares of the Company's Common Stock. In addition, shares of the Company's Preferred Stock may be issued in the future without further stockholder approval and upon such terms and conditions, and having such rights, privileges and preferences, as the Board of Directors may determine. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of any holders of Preferred Stock that may be issued in the future. The issuance of Preferred Stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could adversely affect the market price of the Common Stock and could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from acquiring, a majority of the outstanding voting stock of the Company. The Company has no present plans to issue any shares of Preferred Stock.
ITEM 2.
ITEM 2.PROPERTIES
PAREXEL leases all but one of its facilities. The Company's principal executive offices are located in Waltham, Massachusetts. The Company also leases space in Lowell, Massachusetts, and maintains other North American offices in Chicago, Philadelphia, Raleigh-Durham, San Diego, and Washington, D. C. The Company's European subsidiaries maintain offices in Berlin, Frankfurt, London, Sheffield, Milan, Paris, Madrid, Stockholm, and Tel Aviv. The Company's Japanese subsidiary is located in Kobe, with a branch office in Tokyo, and its Australian subsidiary is located in Sydney. The Company considers all of its properties to be suitable and adequate for its present needs.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which the Company, its subsidiaries, or any of their properties are subject.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1998.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference from page 31 "Quarterly Operating Results and Common Stock Information (Unaudited)" of the Company's 1998 Annual Report to Stockholders included as Exhibit 13.1.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference from page 31 "Selected Financial Data," of the Company's 1998 Annual Report to Stockholders included as Exhibit 13.1.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information is incorporated by reference from pages 13-17, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the Company's 1998 Annual Report to Stockholders included as Exhibit 13.1.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information are incorporated by reference from pages 18-30 of the Company's 1998 Annual Report to Stockholders included as Exhibit 13.1.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item may be found under the captions "Elections of Directors" and "Executive Officers" in the Proxy Statement for the Company's 1998 Annual Meeting of Stockholders. Such information is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found under the captions "Directors' Compensation" and "Executive Compensation" in the Proxy Statement for the Company's 1998 Annual Meeting of Stockholders. Such information is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item may be found under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement for the Company's 1998 Annual Meeting of Stockholders. Such information is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item may be found under the caption "Certain Relationships and Related Transactions" in the Proxy Statement for the Company's 1998 Annual Meeting of Stockholders. Such information is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this report: (1)Financial Statements. The following financial statements and supplementary data included in the 1998 Annual Report to Stockholders, filed as Exhibit 13.1 to this report, are incorporated by reference into Item 8 of this report.
Annual Financial Statements Form 10-K Report to Page Stockholders Page
Report of Independent Accountants 26 30 Consolidated Balance Sheets at 26 19 June 30, 1998 and 1997 Consolidated Statements of Operations for each of the 26 18 Three years ended June 30, 1998 Consolidated Statements of Stockholders' Equity for 26 20 Each of the three years ended June 30, 1998 Consolidated Statements of Cash Flows for each of the 26 21 Three years ended June 30, 1998 Notes to Consolidated Financial 26 22-29 Statements
Financial Statement Schedules: (2)
For the three years ended June 30, 1998: Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.
Exhibits (3)
Exhibit Description No.
(3) Exhibits
Exhibit Description No.
3.1 -- Amended and Restated Articles of Organization of the Company, as amended (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended December 31, 1996 and incorporated herein by this reference).
3.2 -- Amended and Restated By-laws of the Company (filed as Exhibit 3.2 to the Registrant's Registration Statement on Form S-1 (File No. 333-1188) and incorporated herein by this reference).
4.1 -- Specimen certificate representing the Common Stock of the Company (filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-1 (File No. 33- 97406) and incorporated herein by this reference).
4.2 -- Purchase Agreement dated as of August 22, 1996 between the Company and State and Federal Associates, Inc., S&FA of Alexandria Partnership, Martin J. Miller, Howard Tag, Peter Malamis and Laurie Hughes (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-3 (File No. 333-19751) and incorporated herein by this reference).
4.3 -- Registration Rights Agreement dated as of August 22, 1996 between the Company and S&FA of Alexandria Partnership, Martin J. Miller, Howard Tag, Peter Malamis and Laurie Hughes (filed as Exhibit 4.3 the Registrant's Registration Statement on Form S-3 (File No. 333-19751) and incorporated herein by this reference).
4.4 -- Agreement and Plan of Reorganization and Merger dated as of February 28, 1997 among the Company, Rescon, Inc., Rescon Acquisition Corporation, Walter Leroy Hill, as Trustee of the Walter L. Hill Revocable Trust and Walter Leroy Hill (filed as Exhibit 4.2 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.5 -- Registration Rights Agreement dated as of February 28, 1997 among the Company, Walter Leroy Hill, and Walter Leroy Hill as Trustee of the Walter L. Hill Revocable Trust (filed as Exhibit 4.3 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.6 -- Share Purchase Agreement dated as of February 28, 1997 among the Company, Dr. Richard Kay and Janet Kay (filed as Exhibit 4.4 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.7 -- Registration Rights Agreement dated as of February 28, 1997 among the Company, Dr. Richard Kay and Janet Kay (filed as Exhibit 4.5 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.8 -- Share Purchase Agreement dated as of February 28, 1997 among the Company, Dr. Afron Lloyd Jones and Dr. Diana Smith (filed as Exhibit 4.6 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.9 -- Registration Right Agreement dated as of February 28, 1997 among the Company, Dr. Afron Lloyd Jones and Dr. Diana Smith (filed as Exhibit 4.7 the Registrant's Registration Statement on Form S-3 (File No. 333-27487) and incorporated herein by this reference).
4.10 -- Agreement and Plan of Reorganization and Merger dated as of October 22, 1997 by and among the Company, Kemper- Masterson, Inc., KMI Acquisition Corporation, Clarence A. Kemper, P. Michael Masterson, Mark A. Lester, Ronald F. Tetzlaff, Alan R. Parenteau, Jon Voss, Warren Handren and David Hyde (filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-3 (File No. 333-44541) and incorporated herein by reference).
4.11 -- Registration Rights Agreement dated as of December 1, 1997 by and among the Company and each of Clarence A. Kemper, P. Michael Masterson, Mark A. Lester, Ronald F. Tetzlaff, Alan R. Parenteau, Jon Voss, Warren Handren and David Hyde (filed as Exhibit 4.3 to Registrant's Registration Statement on Form S-3 (File No. 333-44541) and incorporated herein by reference).
4.12 -- Share Acquisition Agreement dated as of March 1, 1998 by and among the Company and the former stockholders of PPS Europe Ltd. (filed as Exhibit 4.5 to the Company's Current Report on Form 8-K/A dated March 1, 1998 and incorporated herein by reference).
4.13 -- Share Acquisition Agreement dated as of March 1, 1998 by and among the Company and the former stockholders of Creative Communications Solutions Limited (filed as exhibit 4.3 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.14 -- Share Acquisition Agreement dated as of March 1, 1998 by and among the Company and the former stockholders of Genesis Pharma Strategies Ltd. (filed as exhibit 4.4 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.15 -- Sale and Purchase Agreement dated as of February 18, 1998 by and among the Company and the former stockholders of MIRAI, B.V. (filed as exhibit 4.5 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.16 -- Registration Rights Agreement dated as of February 27, 1998 by and among the Company and the former stockholders of PPS Europe Ltd. (filed as Exhibit 4.4 to the Company's Current Report on Form 8-K/A dated March 1, 1998 and incorporated herein by reference).
4.17 -- Registration Rights Agreement dated as of February 27, 1998 by and among the Company and the former stockholders of Creative Communications Solutions Limited (filed as exhibit 4.8 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.18 -- Registration Rights Agreement dated as of February 27, 1998 by and among the Company and the former stockholders of Genesis Pharma Strategies Ltd. (filed as exhibit 4.9 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.19 -- Registration Rights Agreement dated as of February 27, 1998 by and among the Company and the former stockholders of MIRAI, B.V. (filed as exhibit 4.10 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
4.20 Registration Rights Agreement by and among the Company and the former stockholder of LOGOS GmbH (filed as exhibit 4.11 to the Registrant's Registration Statement on Form S-3 (File No. 333-53941) and incorporated herein by reference).
10.1 -- Employment Agreement dated December 30, 1996 between James M. Karis and the Company (filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended December 31, 1996 and incorporated herein by this reference).
10.2 -- Agreement dated June 30, 1993 between Prof. Dr. med. Werner M. Herrmann and PAREXEL GmbH Independent Pharmaceutical Research Organization, as amended,as of April 1, 1998 (filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1998 and incorporated herein by this reference).
10.3 -- Letter Agreement effective as of July 1, 1997 between Prof. Dr. med. Werner M. Herrmann and the Company, as amended as of April 1, 1998 (filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1998 and incorporated herein by this reference).
-- Letter Agreement between A. Joseph Eagle and PPS Europe 10.4 Limited dated as of April 17, 1997, as amended. (filed as Exhibit 10.3. to the Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1998 and incorporated herein by this reference).
10.5 -- Form of Stock Option Agreement of the Company (filed as Exhibit 10.9 to the Registrant's Registration Statement on Form S-1 (File No. 333-1188) and incorporated herein by this reference).
10.6 -- 1986 Incentive Stock Option Plan of the Company (filed as Exhibit 10.10 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.7 -- 1987 Stock Plan of the Company (filed as Exhibit 10.11 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.8 -- 1989 Stock Plan of the Company (filed as Exhibit 10.12 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.9 -- Second Amended and Restated 1995 Stock Plan of the Company.
10.10-- 1995 Non-Employee Director Stock Option Plan of the Company (filed as Exhibit 10.14 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.11-- 1995 Employee Stock Purchase Plan of the Company (filed as Exhibit 10.15 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.12-- Corporate Plan for Retirement of the Company (filed as Exhibit 10.16 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.13-- Loan and Security Agreement dated as of July 31, 1992 between the Company, Barnett International Corporation and The First National Bank of Boston, as amended (filed as Exhibit 10.17 to the Registrant's Registration Statement on Form S-1(File No. 333-06953) and incorporated herein by this reference).
10.14-- Line of Credit Agreement between PAREXEL GmbH and Deutsche Bank Berlin, dated January 23, 1995 (filed as Exhibit 10.24 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.15-- First Amendment dated as of January 3, 1992 to the Lease dated June 14, 1991 between 200 West Street Limited Partnership and the Company (filed as Exhibit 10.25 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.16-- Second Amendment dated as of June 28, 1993 to the lease dated June 14, 1991 between 200 West Street Limited Partnership and the Company (filed as Exhibit 10.28 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.17-- Letter of employment dated July 6, 1993 between Barry R. Philpott and the Company (filed as Exhibit 10.29 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.18-- Credit Agreement dated December 30, 1994 between PAREXEL GmbH and The First National Bank of Boston (filed as Exhibit 10.30 to the Registrant's Registration Statement on Form S-1(File No. 33-97406) and incorporated herein by this reference).
10.19-- Collateral Agreement dated December 30, 1994 between PAREXEL GmbH and The First National Bank of Boston (filed as Exhibit 10.31 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this reference).
10.20-- 1998 Non-Qualified, Non-Officer Stock Option Plan (filed as Exhibit 4.4 to the Registrant's Registration Statement on Form S-8 (File No. 33-47033) and incorporated herein by this reference).
11.1 -- Statement re computation of per share earnings.
13.1 -- Specified portions of the Registrant's 1998 Annual Report to Stockholders.
21.1 -- List of subsidiaries of the Company.
23.1 -- Consent of PricewaterhouseCoopers L.L.P.
23.2 -- Consent of Grant Thornton
27.1 -- Financial Data Schedule. (B) Reports on Form 8-K: The Company filed a Current Report on Form 8-K dated August 7, 1997 reporting financial results for the quarter ended June 30, 1997.
The Company filed a Current Report on Form 8-K dated October 23, 1997 reporting first quarter results and agreement to acquire Kemper-Masterson, Inc.
The Company filed a Current Report on Form 8-K dated January 27, 1998 reporting financial results for the quarter ended December 31, 1997.
The Company filed a Current Report on Form 8-K dated March 1, 1998 reporting the acquisition of all of the outstanding shares of PPS Europe Ltd.
The Company filed a Current Report on Form 8-K dated March 2, 1998 reporting the acquisition of PPS Europe Limited and Genesis Pharma Strategies Limited (collectively referred to as PPS).
The Company filed a Current Report on Form 8-K dated April 27, 1998 reporting financial results for the quarter ended March 31, 1998.
The Company filed a Amendment No. 1 to Current Report on Form 8-K on Form 8-K/A dated March 1, 1998 regarding "shelf" resale registration rights with respect to the shares of the Company's Common Stock issued in connection with the acquisition
The Company filed a Current Report on Form 8-K dated August 12, 1998 reporting financial results for the quarter ended June 30, 1998
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Waltham, Massachusetts, on the xx day of September, 1998.
PAREXEL INTERNATIONAL CORPORATION
By:Josef H. von Rickenbach President, Chief Executive Officer and Chairman
Signatures Title(s) Date
/s/Josef H. von Rickenbach Josef H. von Rickenbach President, Chief September 25, 1998 Executive Officer and Chairman (principal executive officer)
/s/William T. Sobo, Jr. William T. Sobo, Jr. Senior Vice September 25, 1998 President, Chief Financial Officer, Treasurer and Clerk (principal financial and accounting officer)
/s/A. Dana Callow, Jr. A. Dana Callow, Jr. Director September 25, 1998
Patrick J. Fortune Director September __, 1998
/s/Werner M. Herrmann Werner M. Herrmann Director September 25, 1998
/s/James A. Saalfield James A. Saalfield Director September 25, 1998
/s/Serge Okun Serge Okun Director September 25, 1998
/s/A. Joseph Eagle A. Joseph Eagle Director September 25, 1998
Schedule II
PAREXEL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES ($ in thousands)
Balance Charge Balanc at d to Charged Deductio e at Description beginning costs to other ns and end of of year and accounts write- year expens offs es
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year ended June 30, $1,737 $593 -- $(310) $2,020 Year ended June 30, 2,020 1,718 329 (683) 3,384 Year ended June 30, 3,384 1,924 -- (246) 5,062
DEFERRED TAX ASSET VALUATION ALLOWANCE:
Year ended June 30, $7,491 $147 -- $(1,565) $6,073 Year ended June 30, 6,073 -- -- (2,569) 3,504 Year ended June 30, 3,504 -- -- (891) 2,613
EXHIBIT 21.1 PAREXEL INTERNATIONAL CORPORATION LIST OF SUBSIDIARIES OF THE COMPANY
PAREXEL OWNERSHIP(1)
Barnett International Corporation, a 100% Massachusetts corporation PAREXEL International Holding Corporation, a 100% Delaware corporation PAREXEL International Securities 100% Corporation, a Massachusetts corporation PAREXEL International Inc., a Delaware 100% corporation PAREXEL Government Services, Inc., a 100% Delaware corporation PAREXEL Unternehmens beteiligung GmbH, a 100% corporation organized under the laws of Germany PAREXEL GmbH Independent Pharmaceutical 100% Research Organization, a Corporation organized under the laws of Germany PAREXEL International Limited, a corporation 100% organized under the laws of the United Kingdom AFB CLINLAB Laborleistungs - 100% Organisationgesellschaft GmbH, a corporation organized under the laws of Germany PAREXEL International SARL, a corporation 100% organized under the laws of France PAREXEL International SRL, a corporation 100% organized under the laws of Italy PAREXEL International Pty Ltd., a 100% corporation organized under the laws of Australia PAREXEL International S.L., a corporation 100% organized under the laws of Spain PAREXEL International Medical Marketing 100% Services, Inc., a Virginia corporation PAREXEL International (Lansal) Limited, a 100% corporation organized under the laws of Israel Caspard Consultants, a corporation organized 100% under the laws of France Sitebase Clinical Systems, Inc., a 100% Massachusetts corporation PAREXEL S-Cubed Limited, a corporation 100% organized under the laws of the United Kingdom PAREXEL ClinNet Limited, a corporation 100% organized under the laws of the United Kingdom Pharmon, Ltd., a corporation organized under 100% the laws of Liechentenstein Rescon, Inc., a Virginia corporation 100% PAREXEL ETT, S.L., a corporation organized 100% under the laws of Spain PAREXEL International KK, a corporation 100% organized under the laws of Japan KMI/PAREXEL, Inc., a corporation organized 100% under the laws of Delaware PAREXEL International Holding BV, a 100% corporation organized under the law of the Netherlands PAREXEL International sp. z.o.o., a 100% corporation organized under the laws of Poland PAREXEL MMS Europe Limited (and affiliates), 100% a corporation organized under the laws of the United Kingdom Genesis Pharma Strategies Ltd., a 100% corporation organized under the laws of the United Kingdom Creative Communication Solutions, Ltd., a 100% corporation organized under the laws of the United Kingdom PPS International Communcations Ltd., a 100% corporation organized under the laws of the United Kingdom Pharos Healthcare Communications Ltd., a 100% corporation organized under the laws of the United Kingdom Pharos Healthcare Communications Inc., a 100% Connecticut corporation Centre for Bio-Medical Communications Inc., 100% a New Jersey corporation Cambridge Medical Publications Ltd., a 100% corporation organized under the laws of the United Kingdom Mirai B.V. (and its twelve foreign 100% subsidiaries), a corporation organized under the laws of The Netherlands Logos GmbH, a corporation organized under 100% the laws of Germany
(1) Direct and indirect
EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statements on Form S-3 (File Nos. 333-19751, 333-27487, 333-44541, 333-53941 and 333-60005) and the Registration Statements on Form S-8 (File Nos. 33-80301, 333-16205 and 333-47033) of PAREXEL International Corporation and its subsidiaries of our report dated August 11, 1998, appearing on page 30 of PAREXEL International Corporation's Annual Report to stockholders, which is incorporated by reference in this Annual Report on Form 10-K. We also consent to the application of such report to the Financial Statement Schedule for the three years ended June 30, 1998 listed under Item 14(a) of this Annual Report on Form 10-K when such schedule is read in conjunction with the financial statements referred to in our report. The audits referred to in such report included this Financial Statement Schedule.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts September 25, 1998
EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement on Form S-3 (File Nos. 333-19751, 333-27487, 333-44541, 333-53941 and 333-60005) and Form S-8 (File Nos. 33-80301, 333- 16205 and 333-47033) of our report dated February 6, 1998 on the financial statements of PPS Europe Limited and Subsidiaries included in this Form 10-K of PAREXEL International Corporation.
GRANT THORNTON
London, United Kingdom September 24, 1998