CRO Market Trends

In the past five years, the CRO market has witnessed strong consolidation trends, resulting in a decrease in number of mid-sized, full service CROs. These companies have experienced the slowest annual growth (4 percent annually between 2011 and 2016), whereas small niche or specialty service providers have enjoyed strong relative growth, approaching 10% annually, for the same period.

Change in ownership – Brings more diversity to regular business setup

  • The top four leading CROs - Quintiles, Covance,Parexel, and PPD have each now experienced a change of ownership in the recent past. The owners are strategic partners,well-positioned within the broader health care and life sciences arena, and private equity investors with considerable capital and broad life sciences portfolios. In all these cases,the acquiring companies are not clinical research insiders
  • These buyers see opportunity in re-positioning contract clinical research services.They anticipate operating efficiencies and strategic advantages that can be gained through the increasing use of rich data and sophisticated analytics,as well as the integration of technology solutions and data across the dimensions of project management,study conduct,clinical research,and clinical care

Consolidation brings increase in market share for top 10 CROs

  • Consolidation within the contract clinical research services market during the past five years has been brisk and it has facilitated substantial market share gains among the top 10 largest CROs.

CRO Market Trends

Competition is expected to heat up among integrated service and solution providers. These firms would try to achieve synergies among their integrated portfolio of assets, which would diminish the boundaries between project management and study execution, as well as between clinical research and clinical care.This would bring improvements in data quality,efficiency,performance,and innovation success.

Options for large pharma companies amid consolidation in CRO market space

  • Sponsors now have to choose between a very large CRO or a sub USD 500 million CRO
  • The key for sponsors is to strategically match up the study size and therapeutic area with each CRO selection

Example:

  • A small/mid-size CRO may be the right partner for USD 5 million study,but a larger/mega CRO may be an apt partner for USD 25 million program

Future belongs to specialist and large CROs

  • Niche contract service providers will continue to support sponsor company’s demand directly and as subcontractors
  • Large full-service CROs will continue to look for ways to differentiate and,in a bold move,some have vertically integrated into the study conduct and patient recruitment arena (e.g., ICON’s acquisition of site network PMG Research)
  • The market-leading CROs are well positioned to offer more integrated and creative solutions that will drive innovations in rich data management and analysis and will help accelerate the convergence of clinical research and clinical care

Private equity funded companies are growing dramatically, offering diverse services including oversight, study support, site and patient identification, and selection

  • Several private equity backed companies, including Arsenal Capital’s WIRB-Copernicus Group (WCG) and Cinven’s Bioclinica, are acquiring and rolling-up clinical research services and technology solutions

Examples:

  • WCG acquisitions include several major and regional institutional review boards (e.g., WIRB and Copernicus), technology company ePharma Solutions, central review firm MedAvante, and clinical trial enrolment support firm ThreeWire
  • Bioclinica bought Blueprint Clinical and its risk-based monitoring technology solution. Furthermore, it bought patient recruitment provider Medici Group, pharmacovigilance services company Synowledge, and site network Compass Research