SoccerMum - fair assessment of the "W" in "SWOT" IDT have...

SoccerMum - fair assessment of the "W" in "SWOT"

IDT have certainly been hurt by the higher Aussie $ and with cut backs in spending by the bigger Pharmas over the past few years. Staffing costs are certainly an issue for any Aussie business trying to compete globally for R&D dollars....hopefully the A$ will soften a little over the next few years.

IDT however, have worked and survived in this tough industry for a long time now and realised a long time ago that specialisation in niche areas of Pharmaceutical R&D was the only way to go. Certainly no point in competing in areas where our Asian neighbours have great cost advantages (e.g. generics.)

I guess years building reputation and expertise in the R & D of substances requiring manufacture in containment facilities has been one of their strengths. A critical point here is their reputation as a USA FDA approved facility. Confidence in the quality of the personnel and facilities are paramount and priceless and give that edge over some of our sub-continent friends. I don't expect some of the big Pharmas would trust their IP to contract R&D operations in China or India either.

The manufacturing faclity is state of the art and FDA approved and who cares about asset backing if it is productive and unlikely to ever be put in a "fire sale" situation. I am quite happy for it to be comfortably written off over its productive life.

Cost of Chemicals is not a major issue if the contract is with a company who owns and supplies the drug substance. The global supply chain for other components use in the industry are pretty competitive. IDTs R&D specialty is largely small to medium scale so not into very large bulk manufacture anyway.

IDT is not really into areas that require a lot of IP protection. Their strength is based around their expertise.

Risk is largely with IDT's partner.

Australian market has never been a specific target for IDT that is why they have establised an international profile.

There is more profit in making Pizza....not as much intellect and fun in it though!

IDT is looking at developing some of their own products for niche market areas so perhaps aome IP protection or manufaturing specialisation will give them an edge and offer some protection against future downturns in contract R&D.

It is worth noting that during the GFC many big Pharmas slashed their R&D spending and closed many of their own R&D facilities. With so many big products coming off patent over the next few years there is a rush now to fast track drug product development. Contract Research Organisations are starting to get the benefit of Big Pharmas new preference to contract out a lot of work and I believe there are backlogs and delays occuring.

IDT is now well positioned to take up some of the slack.