The outlines of the world pharmaceutical industry are consistently changing. If certain partners, as those of the pharmaceutical sales, are struggling, no such thing for the CROs, rapidly expanding.

CT - Drug development

The figures are evident: the total number of research projects keeps on increasing. Nevertheless, no one can ignore the fact that in the research and development field, the laboratories are facing major challenges, on the top of the list, the decreasing productivity and the increasing security requirement of the drug agencies and the follow up of the drug after the AMM. The over whole in an environment where the emerging countries stakes are the more and more important. The world pharmaceutical leaders are in quest for new models and are multiplying strategic restructuration. CROs are watching their moves.

The laboratories are outsourcing

As underlined by the latest Precepta audit, the time is more than ever for outsourcing. The pursuit for saving and the quest for transforming fixed cost into variable cost force the laboratories to concentrate the activities perceived as strategic.

It is the main CRO’s force of development. In 2007, the world outsourced research market was about 12 billion Euro (a quarter of the expenses dedicated to development), annually increasing at double digit rate since 2000. This trend should be accelerating by the year 2010 with the recent restructuration announced by numerous groups. The most important CROs are more likely to benefit from these restructurations, and new models are appearing, strengthening ties between the CROs and the laboratories. So, in 2008, Lilly conceded one of its sites to Covance while signing a service contract running over ten years with the CRO.

Another essential growth factor for the CROs: the rising tide of the Biotechnology companies. Deprived by internal capacities of development, they represent moreover already more than third of the activity of the world big CROs. If the financial crisis risks to degrade their finance capacities and thus to delay the starts of new project, the European biotechs represents however a real opportunity, as far as number of their projects are coming to an end.

Outsourcing in clinical research. A 12 billion Euro market

At the world level, about ten CROS are sharing near half of the market estimated at 12 billion euros. Three actors dominate widely the sector, with a turnover upper to a billion Euros: Covance, PPD, Quintiles. Generally speaking, the North American CRO’s have a much larger size than their European counterpart, and certainly the French ones.

In France, in 2007, according to Precepta, some 80 companies are sharing a market estimated at 600 million Euros. The sector is young but concentrated: Six leaders realize 43 % of the total sales. If most CROs are independent, the 21 subsidiaries of foreign groups are the most important in size: They achieved 56 % of the total sales in France, that is 343 million euros. The CROs size varies with their origin – among the full services CROs, The subsidiaries of foreign groups have a 15 million euro average turnover, 4 times greater than the French CROs – and their activity. The CROs involved on the preclinical are the most important with an average turnover of 17.9 million Euros, followed by the CROs involved on the phases I and IIa (11,6 millions). The smallest CROs are the ones specialized in the epidemiology and the biometrics (1,8 millions).

The last striking fact of the sector, CROs coming from emerging countries becomes established in France, via acquisitions. It is the case of Indians Synchron and Veeda Clinical Research.

See the original paper in French