The CRO Market Outlook: Emerging markets, leading players and future trends

Introduction

Rising costs and falling productivity, among other trends are driving pharmaceutical companies to outsource an increasing range of functions to CROs in search of time and cost savings. This produced strong double-digit growth in the sector between 2003 and 2008. However, amongst other resistors, the financial crisis resulted in reduced funding available for biotech companies. This fully updated CRO Market Outlook assesses the market drivers and resistors and predicts the effects of these. The report analyzes the overarching trends in the industry; examines which regions are set to see growth in CRO activity; evaluates the leading CROs; and outlines the future of the industry. The report provides insight into conditions into seven emerging regions including China, India and Latin America. It highlights the evolving business and relationship models between CROs and sponsor companies and enables optimal outsourcing strategy.

Key features of this report

• Identifies and analyses the most recent trends and issues in outsourcing clinical R&D
• Describes where clinical trials will be conducted in the future
• Explores the complexities and the costs of outsourcing R&D to different world regions
• Profiles the major international CRO players
• Provides a detailed assessment of the current CRO market including market share information and the size/growth of R&D spending
• Focuses on emerging CRO markets
• Highlights evolving strategies for working with CROs
• Examines existing and future CRO business models

Key findings from this report

• The total CRO market size is estimated at $20bn in 2008 and expected to grow at an annual rate of 8.5% to reach $35bn through 2015. The market is highly fragmented and the number of CROs worldwide has reached over 1,100 despite continued consolidation.

• CROs provide substantial global capacity to drug developers and have become a critical contributor to clinical trial activity. Projects with high CRO involvement are associated with shorter development times.

• Of the large, global contract research providers, Quintiles is market leader, with 15% of the global market share, followed by Covance and PPD. The five largest CROs have increased their market share and now hold 55% of the total market.

• The leading CROs are commodity full service providers operating on a global scale. They act as one-stop shops for all services, from preclinical through marketing.

• The number of clinical studies conducted in Asia, Central and Eastern Europe and Latin America is constantly rising. India and China are the future outsourcing destinations of choice.

• CROs and pharmaceutical companies are turning to strategic partnerships to gain a competitive edge in the global business environment.

Report Highlights

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Table of Contents
The CRO Market Outlook to 2014
Executive Summary 12
The global contract research organization market 12
CRO market analysis 13
Established regions in the global CRO market 14
Emerging regions in the global CRO market 14
Leading players in the global CRO market 15
The future of contract research 16
Chapter 1 The global contract research organization market 20
Summary 20
Introduction 21
The CRO contribution to drug development 21
Market overview 23
Key market drivers 23
Key market restraints 24
Conclusions and key findings 25
Overview of the global CRO market 26
Total revenue forecasts 26
Global R&D expenditure and CRO market size 27
Global clinical development outsourcing 28
The contribution of CRO to drug development 29
Current market drivers 31
Growth of R&D expenditure from biotech and pharma 31
Cost pressures encourage R&D outsourcing 33
Long term growth and R&D expenditure of biotechnology companies 36
Growing regulatory burden and safety concerns 37
US 37
EU 38
Patient recruitment 39
Increasing number of products in development 39
The development of biomarkers 40
Current market restraints 41
Near term reductions in biotech R&D spending 41
Growing competition and customer consolidation 42
New financial realities alter biopharmaceutical outsourcing landscape 43
Shortage of clinical research personnel 43
Electronic data capture: a threat to CRO revenue 44
Key market trends 46
Globalization 46
EDC evolution 46
Strategic alliances 47
Chapter 2 CRO market analysis 52
Summary 52
Introduction 53
Market conditions 53
Competitive analysis 54
Market share analysis 54
Competitive dynamics 55
Academic medical centers 56
Site management organizations 57
Laboratory analytical services 58
Non-CRO niche service providers 59
Conclusion 59
CRO service models 59
Introduction 59
The full service model 60
SWOT analysis 63
The niche model 64
SWOT analysis 65
Industry strategies 66
Consolidation: Mergers & acquisitions in the CRO industry 66
Expanding the continuum of services: vertical integration 67
Forward integration 67
Backward integration 68
Industry challenges 69
Consolidation within the CRO industry: a threat to close customer relationships 69
Strategic outsourcing: demonstrating clear value to clients 70
Co-development: sharing the risk 71
Chapter 3 Established regions in the global CRO market 74
Summary 74
Introduction 75
The US CRO market 75
Overview 75
Drivers of the US CRO market 77
Challenges of the US CRO market 78
Competitive dynamics 80
The CRO market in Western Europe 81
Overview 81
Infrastructure and local regulations 82
Drivers of the CRO market in Western Europe 84
Challenges of the CRO market in Western Europe 85
Competitive dynamics 86
Chapter 4 Emerging regions in the global CRO market 88
Summary 88
Introduction 89
The Central and Eastern European CRO market 91
Overview 91
Infrastructure and local regulations 92
Benefits of outsourcing to CEE 94
Challenges of outsourcing to CEE 95
Competitive dynamics 95
The CRO market in China 97
Overview 97
Infrastructure and local regulations 98
Benefits of outsourcing to China 99
Challenges of outsourcing to China 100
Competitive dynamics 101
The CRO market in India 104
Overview 104
Infrastructure and local regulations 104
Intellectual property 105
Legislative reforms 105
Benefits of outsourcing to India 106
Challenges of outsourcing to India 106
Competitive dynamics 108
The CRO market in Latin America 110
Overview 110
Infrastructure and local regulations 111
Argentina 112
Brazil 112
Mexico 113
Benefits of outsourcing to Latin America 113
Challenges of outsourcing to Latin America 114
Competitive dynamics 115
The CRO markets in South Korea and Turkey 116
Overview 116
Infrastructure and local regulations 118
Benefits of outsourcing to South Korea 118
Challenges of outsourcing to South Korea 118
Benefits of outsourcing to Turkey 119
Challenges of outsourcing to Turkey 119
Competitive dynamics 119
Chapter 5 Leading players in the global CRO market 122
Summary 122
Introduction 123
The client perspective 124
Capabilities of leading CROs 125
Quintiles Transnational Corp 127
Company profile 127
Business description 127
Partnering collaborations and recent deals 128
Covance 129
Company profile 129
Business description 129
Partnering collaborations and recent deals 130
PPD Inc. 131
Company profile 131
Business description 131
Partnering collaborations and recent deals 132
Charles River Laboratories 133
Company Profile 133
Business description 133
Partnering collaborations and recent deals 134
PAREXEL International 136
Company profile 136
Business description 136
Partnering collaborations and recent deals 137
ICON plc. 137
Company profile 137
Business description 138
Partnering collaborations and recent deals 138
MDS Inc 139
Company profile 139
Business description 139
Partnering collaborations and recent deals 140
Kendle International 142
Company profile 142
Business description 142
Partnering collaborations and recent deals 143
PRA International 144
Company profile 144
Business description 144
Partnering collaborations and recent deals 144
PharmaNet Development Group 145
Company profile 145
Business description 145
Partnering collaborations and recent deals 146
Chapter 6 The future of contract research 148
Summary 148
Introduction 149
The shift towards a strategic model 149
Emerging markets 152
Phases I and IV growth activity 154
Electronic data capture 155
Biomarkers 157
Selected acquisitions/partnerships 159
Conclusion 160
Key findings and conclusions 161
Chapter 7 Appendix 164
Selected bibliography 164
Index 166
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List of Tables
Table 1.1: Functions commonly performed by CROs 22
Table 2.2: The global R&D outsourcing market: five major segments 56
Table 2.3: SWOT analysis: the full service model 63
Table 2.4: SWOT analysis: the niche model 65
Table 2.5: Key deals in the CRO sector 67
Table 4.6: Major CROs operating in Eastern Europe, 2009 96
Table 4.7: Domestic Chinese CROs 103
Table 4.8: Major domestic CROs operating in Latin America, 2009 116
Table 4.9: Selected domestic CROs in South Korea and Turkey 120
Table 5.10: Revenues ($m) and growth of major CROs, 2007-2008 124
List of Figures
Figure 1.1: Estimated CRO market ($bn), 2003-2015e 26
Figure 1.2: Global development expenditure and CRO market forecast ($bn), 2008-2014e 27
Figure 1.3: CRO usage and number of days by which projects overrun 30
Figure 1.4: Global pharmaceutical R&D expenditure ($bn), 2000-2014e 32
Figure 1.5: Number of FDA approvals 1990-2008 33
Figure 1.6: Comparison of drug development cost estimates 34
Figure 1.7: Global biotech R&D expenditure ($bn), 2004-2012e 37
Figure 1.8: Number of products in development by phase 1998-2009 40
Figure 1.9: CRO/Sponsor relationship models 48
Figure 2.10: Market share of major players, 2008 55
Figure 2.11: Typical full service CRO model 61
Figure 3.12: R&D expenditures of PhRMA members and non-member companies ($bn), 1980- 2009 76
Figure 3.13: Overall indexed clinical trial costs by region, 2006-2008 79
Figure 3.14: The European CRO market – revenue forecast ($bn), 2008-2012e 81
Figure 3.15: Pharmaceutical R&D expenditure in Europe ($bn), 1990-2008 82
Figure 4.16: Geographic distribution of clinical trials, 2005 to 2009f 90
Figure 4.17: Clinical trial costs of European countries compared to the UK 92
Figure 4.18: Comparison of trial registration periods in CEE countries (days) 93
Figure 4.19: CRO market in China ($m), 2007-2012e 98
Figure 4.20: China’s capabilities across the value chain 101
Figure 4.21: India’s capabilities across the value chain 108
Figure 4.22: Number of clinical trials in Latin America, 2000-2008 111
Figure 4.23: Clinical trials in South Korea, 2005-2009e 117
Figure 5.24: Revenue growth of top public CROs in 2007-2008 123
Figure 5.25: Capabilities of leading CROs, 2009 126
Figure 6.26: Regional presence of major CROs 152
Figure 6.27: Attractiveness of selected countries for clinical trials 153
Figure 6.28: Global numbers of phase IV trials 2006-2009e 155
Figure 6.29: Electronic data capture market size ($m), 2006E-2012e 157
Figure 6.30: Clinical trials using predictive biomarkers, 2005-2009 158
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