The European market for contract research will double in size between now and 2012, and companies offering clinical trial services are facing “limitless potential for expansion," according to a new report from consultancy firm Frost & Sullivan.
The total European contract research organisation (CRO) market was valued at around $4.8 billion in 2005, but stands to reach $10.21 billion in 2012, as the pharmaceutical and biotechnology industries make increasing use of outsourced services to help reduce costs at a time when R&D productivity is in decline and the cost of drug development has skyrocketed.
CROs have responded in one of two ways – either becoming niche-specific or large service providers – and over the past few decades, pharmaceutical companies have increasingly opted for the services of medium-sized 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, notes the report.
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, it adds.
"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," according to the author of the report, F&S' Amarpreet Dhiman.
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, he noted.
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.
"Among the principal challenges include those related to quality, efficiency, therapeutic expertise, EU regulations, and better sponsor-CRO communication," says Dr Dhiman. "Despite these considerations, companies in the CRO industry are experiencing transformed revenue growth rates, together with limitless potential for expansion."
Soaring drug discovery development times, lengthy regulation-mandated testing and reviewing processes (with approvals often taking up to 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.
"Further, with excess regulation discouraging innovation and encouraging counterfeit products, manufacturers are being compelled to shift R&D spending from research to development," adds Dr Dhiman. "Difficulties with patient recruitment are, moreover, causing delays in data collection and regulatory approval."
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.
"There should be a clear road-map and action plan, as well as detailed planning in the early stages of protocol development," advises Dr Dhiman. "The progress of pre-determined activities should be closely monitored, and the agreement of pre-defined key performance indicators should be established. Aligned objectives need to be agreed upon between pharmaceutical or biotechnology companies and the CRO to achieve mutually common goals."