Around the time he was helping draft the US constitution Benjamin Franklin produced an adage that many corporate investors live by to this day: “Be studious in your profession, and you will be learned. Be industrious and frugal, and you will succeed.”
The growth of contract research organisations (CROs) in biopharma often seems to mirror this outlook. CROs continue to prove attractive to venture capitalists and other funders. They are flourishing because the business case for taking elements of drug discovery out of house and contracting with dedicated specialists has demonstrated itself to be sound. The notion of an industrious collaborator that allows an organisation to maintain the sharpest possible focus on innovation has delivered efficiency gains and helped the industry adopt a more measured approach to overheads.
The restructuring in our industry over the last decade has doubtless helped drive the growth of the CROs, but it’s important not to see this trend in isolation. Globalisation and technological advances are part of a bigger wave that pushes all industries, regardless of sector, to be lean and find new ways of working. Contracting out has long been commonplace in the automotive sector, for example, and in the reshaped world of pharma, commercial collaborations have gained credibility and traction.
The success of CROs has come to be regarded as good medicine for pharma, and, in turn, continues to prompt deals that consolidate key players within the different levels of the sector. M&A activity has moved us from a highly fragmented CRO marketplace to one with a handful of giants and a middle ground where a new generation of significant participants is making its presence felt. At the entry level, meanwhile, there’s a myriad of specialists operating across a broad spectrum of services and therapeutic areas.
Five CROs now hold over 33% of the global market, led by Laboratory Corporation of America Holdings (Covance), IQVIA (Quintiles), Syneos, Paraxel and PRA Health Solutions.
Below these very large-scale enterprises are some of the most exciting and fastest growing businesses in pharma. We see this first hand at Alderley Park in Cheshire. Cyprotex recently expanded into new facilities at the Park, whilst Concept Life Sciences also significantly increased its lab space.
Other rising stars based at the Park include Apex Molecular, a synthetic chemistry specialist; Alderley Analytical, which is focused on bioanalytical services; Apconix, specialists in nonclinical safety toxicology and ion channel electrophysiology; Aptus Clinical, an oncology clinical research provider; and Gentronix, which provides predictive toxicology services.
Another part of the mix is interest from overseas CROs looking for a UK footprint. Essentially, they want closer proximity to potential customers – valuable when working on complex/technical projects where client collaboration is key. The influence of smart software is also making its presence felt, with companies such as Medchemica exploring the use of artificial intelligence in medicinal chemistry.
For the broader-based CROs, the big picture aspiration is typically to reach the dimension of an organisation like PPD. Since being founded in North Carolina in 1985, PPD has grown to operate in 48 different countries and has 21,000 staff. The company provides a comprehensive range of services – including integrated drug development, laboratory and life-cycle management. Its clients and partners show the breadth of the market, encompassing pharmaceutical, biotechnology, medical device, and academic and government organisations.
By gaining scale, CROs are able to broaden their propositions to a more integrated offering to meet demand at the top end of industry. Big pharma generally wants to outsource larger packages to fewer people – not least because it makes it easier to manage. But there has also been marked growth across a spectrum of specialist CROs, delivering work for small and mid-sized biotechs.
A decade ago, CROs were generally only considered for clinical trials and lab services. These days the market has evolved to cover data and analytics for trial insights and design, drug development planning, medical affairs and regulatory consulting. Growth has also come from rising demand for safety and pharmacovigilance, clinical trial feasibility and protocol optimisation.
By therapeutic area the CRO market can be divided into segments that include cancer, infectious diseases, central nervous system disorders, cardiovascular diseases and other therapeutic areas, which include diabetes and various metabolic, dermatology and respiratory diseases.
The market can also be considered in relation to the type of service the CROs are providing and where they fit in the drug development phases. The biggest and overarching category is simply drug discovery but there are many specialist CROs concentrating on areas such as preclinical studies to determine relative toxicity, Phase I to test basic safety and pharmacology, Phase II efficacy evaluation and Phase III advanced efficacy and safety testing to provide enough data for valid statistical conclusions required by the regulatory authority. Finally, there’s Phase IV continuous testing following marketing approval.
Other more general CRO services including pharmacovigilance, bio-statistics, clinical data management, site management, monitoring, regulatory services, protocol development, and medical writing have done well. In the North West, medical communications has also grown in tandem with the rise of CROs, and is adding to a regional cluster of providers such as Ashfield Communications and newer entrants, including Helios, Spirit Medical and Bioscript.
CROs have certainly featured prominently in the successful growth of the new ecosystem growing at Alderley Park, which is now home to a community of 70 SMEs, research charities and over 150 virtuals and start-ups.
The dynamism in the CRO market is not going away and the next wave of expansion could well see CROs either merge with or acquire data companies. Technologies have a way of converging and the alignment of big data and using it to streamline clinical developments is an intriguing possibility. The relentless rise of information technology and digital health has deep implications for clinical trials, for example.
The need to make data-driven decisions and elevate the quality of trials by leveraging technology is already making its presence felt and CROs are becoming part of the solution. Data mining of complex trial data is now a service area. The days of one or two endpoints are passing, there’s now a much wider area of complex data explored.
CROs can thrive, operating in an environment where they have easy access to a large pool of potential collaborators and customers all focused on the same imperative: growth.
