Rapid advances in biotechnology, strong demand for preclinical/Phase I services and increasing use of electronic data capture (EDC) are among the key trends that should keep growth alive in the contract research sector over the next few years, according to Kendle International.
Marking its 10th anniversary as a public company with an Investor Day at the NASDAQ Stock Market site in Times Square, New York, US-based contract research organisation (CRO) Kendle said the total outsourced Phase I-IV drug research and development market was expected to reach $17.8-US$19.6 billion globally in 2007 and $25.9-$29.6 billion by 2010.
Crucial drivers of that trend included a surge in global R&D expenditure on biotechnology, which was forecast to climb from an estimated $28.9 billion in 2006 to $40.3 billion in 2008 and $56 billion by 2010. Demand for outsourcing from biotechs would rise as new therapies moved from the preclinical to the clinical stage, Kendle noted.
With a relative dearth of new chemical entities hitting the market, it was these early phases of the development process that were showing the most vitality, the CRO added. Preclinical/Phase I studies were generating year-on-year growth of 6.8% in 2005/06, while the three-year compound annual growth rate (CAGR) for the segment was 7.6%, suggesting a $6.9 billion market by 2010.
Nor were all of these opportunities dependent on the pharmaceutical industry. Despite concerns in the US about dwindling federal support for clinical studies in critical areas such as cancer, Kendle pointed out that federal government/National Institutes of Health funding for trials was projected to jump from an estimated US$3.61 billion in 2004 to US$6.64 billion in 2007.
Over the same period, funding from private groups and universities was expected to rise from $544 million to $630, while industry would shell out $19.3 billion on clinical trials in 2007 compared with an estimated $14.5 billion in 2004.
Another key driver, particularly in terms of sharpening R&D productivity and cutting development costs, was eClinical technology. As Kendle noted, global revenues from eClinical trials were forecast to reach around $700 million by 2012, compared with just over US$200 million in 2005 and nearly $300 million in 2007. In a CRO survey by Jefferies in March 2007, vendor relationships, EDC and functional outsourcing (in that order) were identified as the top three strategies for improving R&D productivity/efficiency in the pharmaceutical market.
Well placed
Kendle believes it is well placed to capitalise on these opportunities, having expanded by 50% from 2006 to 2007, partly by acquiring Charles River Laboratories’ Phase II-IV clinical services business last year. Net revenues grew from $156.2 million in 2003 to $283.5 million in 2006, with the CRO’s proforma operating margin improving from 1.4% to 10.0% over that period.
The company’s future “has never been more promising”, claimed chairman and chief executive officer Candace Kendle. “As our customers continue to embrace outsourcing as a strategic approach to decrease costs and gain efficiencies in their drug development efforts, we anticipate they will turn increasingly to CROs like Kendle that provide global patient access, medical and therapeutic expertise, and experienced clinical development teams to deliver their global clinical trials.”
To illustrate the value of a global presence, Kendle said recruitment rates for clinical trials in Bulgaria and Poland were 2.85 patients/site/week and 2.64 patients/site/week respectively, compared with 0.77 patients/site/week in the US and 0.36 patients/site/week in Canada. The company is now one of only two global CROs to draw at least 50% of its revenue from outside the United States, it points out.
