Executive Summary

One company generally characterized as a CRO, but which touts itself as being much more than an outsourcing business, stands out as having actually formed the sorts of risk-sharing arrangements with its pharmaceutical clients that other R&D outsourcers only talk about. AAI is going further than most other CROS are even contemplating: it is willing to accept pre-FDA approval risk in exchange for milestone and royalty rights. AAI is also developing its own compounds, which it will outlicense for marketing.So far, however, the company's recent lackluster financial performance makes it look a lot like other CROs. AAI's management, however, argues that in the long run, its ability to provide product solutions--including the extension of current products through dosage reformulation and drug delivery improvements-- will stand it in good stead by giving pharma companies that are increasingly preoccupied with blockbusters, a way to extend the life of drugs it might otherwise abandon.