Capability has overtaken cost efficiency as a key differentiator in the European contract research market, with an increasing trend towards full-service models, says a new strategic analysis by Frost & Sullivan.

While cost efficiency remains a major driver for any pharmaceutical or biotechnology company, there is now more emphasis on capabilities rather than the ability to provide services at low cost, Frost & Sullivan observes, adding that expertise is “a prerequisite” for contract research organisations (CROs) involved in late-stage clinical trials.

“Many European CROs are moving towards a full-service model,” comments Frost & Sullivan industry analyst Ranjith Gopinathan. Moreover, he notes, companies such as Eurofins “provide value-added services like consultancy, in order to differentiate themselves in the highly competitive European CRO market landscape”.

Biomarker driver

European CRO Markets – A Strategic Analysis estimates that the sector will be worth US$13.52 billion by 2015, up from US$7.10 billion in 2008. Growth is expected to be spurred by the need for pharmaceutical and biotechnology companies to control costs and accelerate product development.

A new growth driver, Gopinathan believes, will be biomarkers as companies look for ways of avoiding the high costs of drug failure during clinical trials.

For example, he notes, France-based CRO Biovays focuses on biomarker expression, localisation and quantification. By identifying biomarkers, European CROs can help their clients with compound selection, dose optimisation, and efficacy and safety monitoring.

CROs in Europe are also establishing strategic partnerships with pharmaceutical companies and adopting effective outsourcing models, Frost & Sullivan points out. In addition, they are expanding their global presence.

“Clinical trials are increasing in size and CROs are going offshore to benefit from untapped patient populations and imperatives of cost efficiency,” Frost & Sullivan says.

There are also more opportunities for CROs offering initial screening programmes and capabilities in preclinical and early clinical trials, it adds, noting that medium-sized European players such as UK-based Melbourn Scientific are venturing into the preclinical segment to capitalise on this trend.

At the same time, Frost & Sullivan points out, consolidation in the pharmaceutical industry has led to more intense competition for CRO contracts, with a knock-on effect on the European contract research sector.

It cites PPD’s acquisition of AbCRO, a European contract research organisation offering Phase II-IV clinical services, which will help the US company to penetrate key markets in Central and Eastern Europe such as Romania, Bulgaria, Serbia and Croatia.