With pressure mounting on pharmaceutical companies to generate better returns from research and development expenditure, the contract research industry worldwide is forecast to show a compound annual growth rate (CAGR) of 12.8% to 2018, a new report says.

Revenues from contract research organisations (CROs) should reach $56 billion by the end of that term, predicts the report by US-based GBI Research. Growth in the sector has been accelerating since 2009, when CRO revenues of $19.1 billion were only 6% higher than in the previous year.

The global economic crisis meant a number of pharmaceutical companies cut back on R&D spending, GBI Research points out. R&D outlay by the 10 largest pharmaceutical companies increased at a CAGR of 8.3% between 2004 and 2010, while revenue growth over the same period was only 6.5%.

“However, funds have begun flowing back into R&D, and the expected expiry of several patents [in 2012-2018] may force financially struggling pharmaceutical companies to outsource clinical trials,” GBI Research suggests.

This trend was already evident in 2010, when CRO industry revenues climbed by 12.0% to $21.4 billion in total.

Offshoring trend

Outsourcing or offshoring to developing countries has been a particular feature of the shift to external R&D.

According to the US-based registry clinicaltrials.gov, by November 2011 43.9% of clinical trials were being conducted in the US, 22.9% in Europe, and 11.6% in Asia. The rest went to Canada, Mexico, Australia, the Middle East and Africa (21.4% in total).