CRO Market Characteristics
A Contract Research Organization (CRO) is a service provider, which offers end-to-end solutions in conducting clinical trials for biopharmaceutical and medical device companies. The core services offered by CROs to biopharmaceutical companies include initial drug discovery solutions, toxicology studies, bio-analytical services, central laboratory, site monitoring, data management services, vigilance, bio-statistics, study and development program design and consulting, regulatory affairs and a variety of post-marketing surveillance services.
Following the major reason of hiring a CRO, CROs have shifted their focus on emerging markets. CROs are focusing on conducting clinical trials in emerging countries such as China, India and Brazil to reduce drug development costs. As the sponsors of the CROs struggle with the rising cost of drug/device development, they are also challenged to improve productivity and efficiency, streamline clinical trials, and meet more rigorous regulatory and quality assurance requirements in order to sustain profitability. The cost of conducting clinical trials in developing countries is around 50% lower than that of developed countries, with the potential of less costly clinical trial enrollment and more cost-effective trial conduct.
CRO Market Competitive Landscape
Major players in the CRO market include IQVIA, Laboratory Corporation Of America Holdings, ICON Plc, PAREXEL International Corporation and Pharmaceutical Product Development (PPD), Inc.
Historically, the CRO market was fragmented, but increasing merger and acquisition activities led to the consolidation of the market. In 2017, top 9 CROs in the market held about 46% of the market with IQVIA leading the group, followed by Laboratory Corporation of America Holdings, ICON Plc, PAREXEL International and Pharmaceutical Product Development. In 2017, Laboratory Corporation of America Holdings and ICON Plc improved their expertise by acquiring Chiltern, a UK-based healthcare diagnostics, and Mapi Group, a France-based CRO, respectively.
Full service offerings have become key advantages for larger CROs over their smaller and mid-sized competitors that often specialize in a few specific functions, as even smaller biopharmaceutical companies typically prefer to conduct all outsourced development operations at the same provider, eliminating inefficiencies and delays that often arise with numerous providers working a single project.
Contract Research Organization Market Size
The global CRO market is expected to reach $70 billion by 2021, growing at a CAGR higher than 10%. This is mainly due the rising cost of drug development, increasing patent expirations of drugs and rising investments in the pharmaceutical and biologics industry in emerging economies.
Globally, pharmaceutical and biotechnology companies in the United States and Europe are increasingly outsourcing their core research activities to the CROs in developing countries owing to the cost containment pressures and demand for high quality services. Because of this, most of the multi-national CROs are now expanding their operations to developing countries in Latin America, APAC and the Eastern Europe because of lower cost of conducting clinical trials, favorable government regulations, strict intellectual property rights and low labor and other overhead costs in these regions compared to the US and Europe countries. Pharmaceutical and biotech companies in developed countries belligerently seek to reduce costs, limit future investments and realign operating models to reduce revenue levels. Thus, the economic conditions in the developed countries are expected to drive the demand for outsourcing services.
Expanding scope of CRO solutions through technology to drive the contract research organization market. CROs are trying to expand their scope of services by providing solutions across all research and development phases through new technologies. Technological developments such as wearable health monitors, help in identifying potential patients and allow to gather huge volumes of data, without causing discomfort to the patient. Greater investments in cloud technology and big data will continue to play an important role as the industry evolves and CROs strive to become more efficient and maintain a competitive edge. These capabilities will help to expand the market audience for CROs, particularly in commercialization, where penetration is relatively low, enhancing their value proposition for biopharmaceutical companies and medical device companies.
However, the CRO market is expected to face restraints from several factors such as stringent government regulations, clinical trial failures and data safety concerns.
As organizations are getting increasingly connected through the use of new platforms such as cloud and social media, there has been a consequent rise in potential threats, complexity of attacks and a rise in the intensity of breaches. The existing security measures are inadequate to handle these challenges. It is imperative for the life sciences industry to protect their proprietary and confidential information related to their research and products. Moreover, it also deals with highly sensitive and personal data. Life Sciences companies prefer to partner with CROs or ITOs that may support and provide a high level of data security services. The contract research units need to assure the pharmaceutical companies that their process is trust worthy, of the prescribed standards and data leakage or breach are impossible. Despite the growing contract research outsourcing process, the pharmaceutical companies still consider reliability of the service provider a major challenge as there have been many cases of data breach in the past.
CRO Market Segmentation
The global CRO industry can be segmented on the basis of service type, therapeutic area and by geography.
By Service Type- The CRO market can be segmented into drug discovery, phase III, phase II, preclinical studies, phase IV, phase I and others. Among these segments, the drug discovery segment accounted for the largest segment in the global CRO market, in 2018, for about 33% of the CRO market.
By Therapeutic Area- The CRO market can be segmented into oncology, CNS disorder, cardiovascular disease, metabolic disease, infectious disease and other therapeutic area. Among these segments, the oncology CRO services segment accounted for the largest share in the CRO market by therapeutic area, in 2018, which accounted for about 26% of the CRO market.
By Geography- The global CRO market is segmented into North America, South America, Western Europe, Eastern Europe, Asia Pacific, Middle East and Africa. Among these regions. The CRO production in the North America was the largest in the world, accounting for 41% of the global CRO production in 2018. The CRO consumption in the North America accounted for about 46% of the global CRO consumption in 2018. The large market size can be attributed to the presence of a large number of pharmaceutical companies and large drug development activity in the region. The difference can be explained by the use of lower cost offshore locations for some CRO activities by US pharmaceutical firms, although the majority of outsourced activity remains within the US market.
CRO Market Trends
Increasing focus on emerging markets, strategic partnerships and rising consolidation in the CRO market are the major trends witnessed in the CRO industry.
Potential Opportunities in the CRO Market
CRO analysis shows that the growing biologics market, increasing demand for outsourcing, investments in emerging economies and technological advancements, is expected to increase the potential and scope for the global CRO market.