In a wider industry dominated by huge multinationals with household names, the story of Irish-based drug research company Icon will have gone unnoticed by many.
Headquartered in Leopardstown in south county Dublin, it employs over 40,000 people around the world – around 1,000 of them in Ireland – and is listed on the Nasdaq in the US. Outsourcing clinical development, it services the hugely important pharmaceutical, biotech and medical device sectors.
Until recently, all had seemed well at the Ciaran Murray chaired company which was first founded in Dublin in 1990. However, recent months have brought a cresting wave of bad news – and its share price has taken a pummeling.
Last week, Icon withdrew its financial guidance for 2025 – and said its results for the fourth quarter would be two months late. It is investigating how it accounted for revenues in 2023 and 2024, saying it may have over-stated earnings by 2 per cent.
READ MORE
As investors digested news of the investigation, Icon’s stock fell precipitously – losing almost $8 billion in market capitalisation.
The problematic start to 2026 follows an eventful 2025.
In February of last year, Icon said it would “vigorously” defend a US lawsuit that stated company insiders had “motive and opportunity to defraud investors” when they sold almost $78 million worth of shares over a 15-month period.
Shareholder Chang Kwok Shing alleged that the stock had been sold at an “artificially high price” before slumping in value when Icon published its financial results the previous October.
The statement of claims from the case said the insiders included then group chief executive Stephen Cutler, who sold about $17 million of shares and former chief financial officer Brendan Brennan, who disposed of nearly $22 million of stock. Both men were listed as defendants in the case.
The complainants added current chief executive Barry Balfe as a defendant in September.
The lawsuit alleged that Icon executives had presented the company’s prospects in a favourable light even as drugmakers were dramatically cutting their research and development budgets.
A number of US law firms invited investors who had bought ordinary shares over the period to join the class action. The company filed a motion in November to have the case dismissed – but the court action is set to continue.
This and the accounting investigation at Icon compounds wider issues it faces within the clinical trials industry.
Its rivals have also posted disappointing results recently – citing cancellations of contracts – and seen their stock market valuations take a hit.
Trump
Industry observers say much of this fall-off in sentiment has been driven by the Trump administration and the loosening of regulations in the United States.
Confusion about policy plagued the industry throughout 2025.
In order to deliver on the US president’s promise to deliver cheaper drug prices, the Food and Drug Administration may authorise new medicines after just one clinical trial – as opposed to the standard two.
At the same time, Trump was widely touting his forthcoming drug discount programme TrumpRx. Its website went live earlier this week – promising reduced prices for consumers across a range of drugs.
Consumer advocates, however, are less than impressed with its offerings – and say many generic drugs can be found elsewhere for cheaper.
As a result of all this flux, investor confidence has been rattled across the sector. When news of Icon’s accounting problems landed last week it meant an almighty fall was hard to avoid.
During the Covid-19 pandemic everything seemed rosy at the company. It was Icon who carried out the clinical trials for the Pfizer/BioNTech vaccine that would later become the gold standard.
Speaking to The Irish Times in 2021, Stephen Cutler said his staff was very proud of having been “instrumental really in getting the first vaccine to market”.
The sense of momentum continued when it purchased US-based PRA Health Services in a $12 billion cash and stock deal. It was that consolidation that boosted Icon’s annual revenues to $6 billion and pushed its employee headcount to beyond 35,000.
More recently, it has been carrying out an anthrax vaccine clinical trial for the US Biomedical Advanced Research and Development Authority.
Established
The company was established by two scientists in 1990 – Ronan Lambe and John Climax – after the men had been made redundant due to a business collapse. Ploughing their own money into the venture they made a killing when the company went public in 1998.
At a time when drug companies tended to conduct their own research internally, they saw a gap in the market. They steadily grew the outsourcing business – making acquisitions across the globe – before listing in New York.
Climax still sits on the board of Icon and is reported to be one of its largest non-institutional shareholders. Lambe retired from the board in 2018.
Icon is not their only venture together.
Lambe and Climax also set up the Leopardstown-based DS Biopharma – launching a spin-off company in 2016 called Afimmune, which focuses on inflammatory disorders.
As he was handing over the reins as chief executive to Barry Balfe, Stephen Cutler addressed industry analysts during a conference call at the end of October last year. He spoke about the vast changes that had occurred at Icon during his 14 years there.
During that time, he said, the workforce had grown from 8,500 to over 40,000 and the company had risen from number six in the industry to the “top tier”.
Barry Balfe thanked Cutler for a smooth transition period but spoke about the “mixed market” the company had faced to that point in 2025.
The call was generally upbeat – going so far as to suggest that clarity was emerging around Trump’s plans for the sector – and even bad policy would be a “net good” for the sector.
At the same time Balfe said the company was “not going to cut our way to victory in terms of pricing” it appears to have been shedding staff.
It said last week it had 40,100 workers at the end of 2025. This was down 1,800 on the 41,900 who were reported as being employed there 12 months earlier.
The ultimate impact of the accounting investigation on Icon’s bottom line is proving difficult for market analysts to quantify. The probe is being carried out by external legal counsel alongside forensic and technical accounting firms.
In its statement to the markets last week Icon said it expected to “report one or more material weaknesses” as a result – though it denied that customers had been affected.
The big London research firm and equity broker Rothschild & Co Redburn recently downgraded Icon’s stock citing concerns over the investigation.
American investment bank TD Cowen, however, this week upgraded its outlook on Icon suggesting that the current share price overstated the material impact this would have on earnings.
Buying opportunity
Indeed, some saw last week’s plunge in value as a buying opportunity.
The day following the announcement, US investment firm Kerrisdale Capital said it had put 20 per cent of its capital into Icon shares – claiming the decline in the stock price was “far too dramatic” for a company that “gushes $1 billion of cash flow”.
Sahm Adrangi is Kerrisdale’s chief investment officer and, according to the firm, currently manages around $266 million in assets. He said the share price on offer last week was an “attractive” one.
“Icon’s statement about the accounting problem came out during a period when the overall market was trying to get its head around which companies are going to be adversely affected by AI,” says Adrangi. “With the CRO (Contract Research Organisations) sector in general being hit, the confluence of timing resulted in the stock being down so much.”
Adrangi, known more for his short-selling, believes Icon’s rarefied status in the clinical trials sector means it will ride out the current turbulence.
“The overall sector has headwinds – and Icon specifically. But it generates a lot of cash-flow and is one of the top CRO companies in the world – there are not a lot of companies that can provide the services that Icon does. A $6 billion market capitalisation was quite low for that amount of cash flow – even with the headwinds that everyone knows about.”
Asked for his thoughts about cost-cutting measures that the company implemented last year, Adrangi wouldn’t comment.
As of earlier this week, Adrangi and his colleagues seemed pretty pleased with the decision. The investment firm’s social media channels noted that their punt on Icon had returned 20 per cent over five days.
While Kerrisdale may have benefited from getting in at the right moment, existing shareholders are still well under water compared to just over a week ago. Yesterday Icon shares were trading at around $96 – compared to $143 the day before the accounting probe was made public.
Another definite impact stemming from last week’s statement is the increased interest from law firms in the US.
There has been a significant increase in class actions in the US over recent years – with individuals and businesses more aware of their rights – and more funding to pursue actions.
The New York based Rosen Law Firm – which describes itself as “the most trusted name in securities class action law firms” – is attempting to round up investors who purchased Icon shares during the period under investigation.
It says Icon “may have issued materially misleading business information to the investing public”.
Several others may have spotted an opportunity to pursue the company for shareholder compensation – such as Bragar Eagel & Squire.
It says it is investigating whether “Icon has violated the federal securities laws and/or engaged in other unlawful business practices”.
At least two other law firms on the West Coast are planning similar actions.
Drag
So long as these potential actions hang over the company, they are likely to act as a drag on the share-price – as investors price in the possibility of costly settlements. The company can be expected to mount a vigorous defence in all cases.
Both Rothschild Redburn and TD Cowen have said they do not foresee the share price recovering to its former glory in the immediate term. The latter has set a price target of $120 – noting both the investigation and what it calls the “AI overhang”.
Sahm Adrangi says “there is probably truth to claims on both sides of the spectrum” in the debate about how AI will impact the CRO sector.
He says there are those who see the potential to enhance what companies like Icon can do – and those who fret about it taking away significant amounts of work.
Adrangi observes too that the broader regulatory challenges to the industry are likely to play out over the medium to long term – and that the FDA in the US “moves pretty slowly”.
Icon’s leadership will be hoping it can move on fairly quickly from the controversies of the past 12 months. All eyes will be on the outcome of its accounting investigation and the results for 2025 when they are eventually published.
Dublin-based clinical trials firm’s shares have plunged in the past week
