We may wonder what is to become of the contact research organisation (CRO) industry while the economy slowly recovers from the recent recession but according to a recent report carried out by Frost & Sullivan, the CRO industry will continue to grow. During this current climate, biotech and pharma companies are less likely to rely on or invest in internal abilities to carry out their clinical trials. However, somebody has to do them...
The report has also warned that the "US CRO Markets-Key Therapeutic Areas" anticipate that struggling pharma and biotech companies will fail to meet the costs for trials currently underway. But this is not likely to be a lasting occurrence, suggests the report.
Senior industry analyst for Frost and Sullivan, Barath Shankar Subramanian revealed that the annual revenue growth for CROs has decreased from the 14-15% range to 10% this past year.
Although, this is not all bad news - Subramanian claims that the industry's annual revenues will double from now until the year 2015, growing from a current 12.91 billion to $22.87 billion in the years to come. This, he says, will be due to sponsor firms increasingly adopting tactical partnerships with smaller services firms or CROs. "After 10 years of talking about such relationships, CROs and pharma companies are beginning to forge them," he says.
Subramanian uses the immense Eli Lilly/Covance partnership as an example, which came in to effect in August last year, where Covance has outsourced $1.6 billion worth of drug development business to Lilly over the next 10 years.
"That's the flavor of the season," Subramanian says. "We're seeing some new models being explored when previously it was purely transactional, with CROs taking a wait and watch attitude toward strategic partnerships."
In addition, partnerships with CROs enable small sponsors more time within the research cycle to investigate promising molecules. Beginner biotech and pharma firms used to out-license their Phase I or Phase II; which resulted in a large amount of ambiguity for the future of the research study. In this day and age, conversely, more and more start-up firms are able to keep products in the pipeline for a longer period of time which in turn brings them closer to the market and this is due to the cost-effectiveness made possible by CROs. This is an optimistic outcome for the sponsor and the CRO.
