Over the past few decades, pharmaceutical companies have increasingly opted for the services of medium-sized contract research organisations (CROs) or smaller organisations over their larger counterparts.
In addition to enhanced responsiveness and flexibility, these medium-sized CROs typically provide good geographic coverage, a broad therapeutic portfolio and years of experience in managing complex trials. Their ability to advise companies on realistic time lines for the clinical development of drugs in a range of therapeutic areas and on changes in regulatory guidelines has placed them in an ideal position to handle major projects, while still offering clients a more personalised service than the largest CROs.
Frost & Sullivan finds that the CRO markets in Europe earned revenues of US$4.80billion in 2005, and estimates this to reach US$10.21billion in 2012.
Against a backdrop of stricter regulations, guidelines, price and reimbursement legislation resulting in a changing business environment, research within the pharmaceuticals industry has tripled in the past 25 years, with the pipelines of the top companies doubling.
“The growing market in drug development and increase in R&D investment, including that of small (biotechnology) companies, coupled with an increase in development costs, the importance of timely development of new products and the need to reduce
time-to-market have emerged as important financial considerations for achieving business growth,” elaborates Frost & Sullivan Programme Leader of Drug Discovery Dr Amarpreet Dhiman. “Even as current pharmaceutical and biotechnology R&D spending levels surpass US$36billion and blockbuster drug development plateaus off, CROs are expanding in the direction of becoming either niche-specific or large service providers.”
The growth of the clinical trial industry is inextricably linked to the growth of the healthcare industry. In particular, escalating R&D activities have led to a higher demand for clinical trial services that meet global standards. However, even while it expands, the CRO industry faces a raft of new challenges.
Soaring drug discovery development times, lengthy regulation-mandated testing and reviewing processes (with approvals often taking upto a decade and a half) as well as rapidly escalating R&D expenditures are causing clients to place increasing pressure on CROs to yield quick results. Besides, as patent protection for a drug begins at the R&D stage itself, manufacturers are trying to move through their R&D time lines at a quicker rate, giving them as much patent-protected time as possible to profit from drug sales.
With the growing demand to provide experienced research staff for every project in a primarily repeat business, outsourcing management can often become difficult and lead to lengthened project completion times, lower data quality and, ultimately, client dissatisfaction. At the same time, however, sponsors are under increased pressure to fill their pipelines with new product candidates and quickly rush new drugs to market.
Facing increasing competition in a repeat business environment, CROs must cope with the pressures to win client businesses and deliver on expectations. Smaller firms or institutes with limited offerings often have greater difficulty competing against larger full-service CRO companies with a wide breadth of services, since many sponsors prefer working with a ‘one-stop shop’ that can take a product through its entire development life cycle through to stages of drug approval. u
For more information, visit www.healthcare.frost.com
