Global Market Outlook on Clinical Research Organizations

The global CRO market was estimated at $35 billion in 2017, and it is expected to grow at a CAGR of 6.9 percent to reach $40-41 billion by 2019

This is due to the increased outsourcing (>50 percent) seen from the pharmaceutical and biotechnology companies, with 85 percent comprised by the clinical segment

clinical-research-organizations-global-market-size

  • Drug discovery is the largest segment by service type and accounts for approximately 33%,of the total CRO market
  • Although spend on specialty focus, such as rare diseases, personalized medicines, and specialty oncology, has increased, the larger portfolio by spend size would continue to drive the programmatic CRO market
  • The clinical segment of the CRO market is valued at $30.6 billion in 2017 and is expected to grow at a CAGR of 7 percent. Almost 85 percent of the global CRO market revenue comes from the clinical CRO market. This is directly related to about 50 percent of Phase II–IV activities already being outsourced by pharma companies
  • On the other hand, the preclinical segment was valued at $2.8-3 billion in 2017 and is expected to grow at a CAGR 10 percent, as more in-house preclinical activities such as discovery and early phase studies are beginning to be outsourced by pharma companies at a range of 38-40 percent

Regional Analysis

North America and Europe hold greater than 80 percent of the CRO market, as pharma spend ~70 percent and 18 percent of their clinical trial R&D spending in these regions, respectively

  • Though the cost of conducting clinical trials in emerging countries will be 60 percent less than that of developed countries, greater than 80 percent of the market revenue is from developed countries - US, Canada, the EU, Japan
  • APAC contributes to 10 –15 percent of the overall CRO revenue, which makes this region the third largest market share holder with increased trials being seen in China, Russia and South Korea
  • Increased outsourcing of clinical services such as Clinical Data Management, Biostatistics, Pharmacovigilance, etc., by large pharma to emerging market of India is being seen. The reason being low cost labor availability, which will further drive up the revenue of Asia-Pacific region in the future

CRO Market Drivers

  • Pharma companies have increased outsourcing their in-house R&D activities to CROs
  • Large molecule development outsourcing has increased from ~35 percent to 45 percent, due to more supply and availability of reliable single use technology

Cost Containment 

  • Pharmaceutical companies one of the major factors is to reduce costs, by lowering their internal capacities in manufacturing and R&D. This leads to expenses being diverted toward outsourcing, making CROs play an integral part of pharma to increase their productivity, access new capabilities, shift fixed to variable costs, and improve their global reach

Real World –Data and Analytics

  • As regulators and payers place increasing importance on RWD, pharma is seen to partner with CRO, to support with predictive modeling, analytics, etc. This is driving CROs to either acquire or partner with specialists in this area
  • E.g., PPD is working to expand its expertise for RWD by joining forces with a division of insurance giant Anthem

Emerging Markets 

  • The emerging markets of Brazil, China, Russia are witnessing increased trials, creating demand for regional CROs, with strong regulatory knowledge. For example, OCT, Intrials, etc.
  • Examples: Offshoring of HEOR, pharmacovigilance services to India offer cost saving of ~30–45 percent. The acquisition of Quantum Solutions India by Parexel is an example of this growing trend. South Korea is emerging as the next early phase destinations, with a 8.22 percent CAGR between 2012 and 2016

New Areas of Research and Regulations

  • The increased focus of pharma on large molecule therapy, rare diseases, specialty treatment, point of care assays, and personalized therapy & devices will require clinical trial testing and submission of data to the relevant regulatory authorities. For example, >80 percent of CRAs of INC Research are principally focused on one therapeutic area
  • Also, the depth of regulatory scrutiny has increased, such as early RWD collection and reporting every adverse events, driving increased clinical trials