PDI Inc. (PDII) filed Quarterly Report for the period ended 2009-09-30.
PDI Inc. is a leading and rapidly growing contract sales organization providing customized product detailing programs and other marketing and promotional services to the United States pharmaceutical industry. They are engaged by their clients on a contractual basis to design and implement product detailing programs for both prescription and OTC pharmaceutical products. Such programs typically include three phases: design execution and assessment. Pdi Inc. has a market cap of $73.2 million; its shares were traded at around $5.15 with and P/S ratio of 0.7.
Highlight of Business Operations:
like PDI. A very significant source of our revenue is derived from our sales force arrangements with large pharmaceutical companies, and we have therefore been significantly impacted by cost control measures implemented by these companies, including a substantial reduction in the number of sales representatives deployed. This has culminated in the expiration or termination of a number of our significant sales force contracts during 2006 and 2007, including our sales force engagements with AstraZeneca, GlaxoSmithKline, sanofi-aventis and another large pharmaceutical company customer. These four customers accounted for approximately $150.9 million in revenue during 2006 and $15.9 million in revenue during 2007. In addition, a significant sales force program for one of our clients was terminated, effective September 30, 2008, due to generic product competition. This program accounted for approximately $10.7 million in revenue in 2008. This reduction in demand for outsourced pharmaceutical sales and marketing services could be further exacerbated by the current economic and financial crisis occurring in the United States and worldwide. For example, certain customers within our marketing services business segment have recently delayed the implementation or reduced the scope of a number of marketing initiatives. In addition, most of our revenue is derived from a very limited number of large pharmaceutical company customers and trend is likely to continue, particularly in light of continued consolidation within the pharmaceutical industry. Our two largest customers accounted for approximately 42.2% and 13.5%, or a total of 55.7%, of our service revenue for the nine months ended September 30, 2009. If companies in the pharmaceutical and life sciences industries continue to consolidate and significantly reduce their promotional, marketing and sales expenditures or significantly reduce or eliminate the role of pharmaceutical sales representatives in the promotion of their products, our business, financial condition and results of operations would be materially and adversely affected.
Sales Services revenue for the quarter ended September 30, 2009 decreased by approximately $2.2 million or 10.9% compared to the quarter ended September 30, 2008 primarily due to a reduction in sales force engagements. Sales Services revenue from new contracts and expansions of existing contracts was more than offset by lost revenue from the internalization of our contract sales force by one of our long-term clients and the expiration or termination of certain sales force arrangements in effect during 2008. Marketing Services revenue for the quarter ended September 30, 2009 increased by approximately $0.6 million, or 12.5%, as compared to the quarter ended September 30, 2008. This was partially attributable to an increase in revenue within our Pharmakon business unit of $0.9 million as a result of an increase in the number of projects, partially offset by a decrease at VIM of approximately $0.4 million as this business unit ceased operations during the third quarter of 2009.
Cost of services for the quarter ended September 30, 2009 was $14.2 million, 41.1% less than cost of services of $24.1 million for the quarter ended September 30, 2008. Sales Services cost of services declined for the quarter ended September 30, 2009 versus the comparable prior year quarter primarily due to a reduction in headcount and related costs correlating to the overall reduction in the number and size of our sales force engagements. Marketing Services cost of services declined for the quarter ended September 30, 2009 versus the comparable prior year quarter due to the closing of the VIM business. PC Services had cost
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