Overview and key trends in the Contract Research and clinical development industry

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CRO INDUSTRY OVERVIEW
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Executive Summary (Industry Overview)
• The CRO market is a $25-$30B market globally growing at a 7-9% CAGR through 2020
• Preclinical Services account for 25% of spend; Ph I-IV services account for 75% of spend
• Growth of outsourcing R&D has been driven by volume of trials, globalization and complexity of
trials, and the ability to leverage the scale and cost efficiency of CROs (lower cost, speed to market)
• In the past 5 years, additional growth has come from large Pharma shifting towards a “strategic
partnership” model with 2-3 CROs at most in order to deeply integrate clinical processes
• Moving forward, Pharma R&D will grow between 1.5-2.5% CAGR, with more emphasis on specialty
drugs, driving CRO growth through both strategic and functional partnerships
• Therapeutic area expertise, global regulatory competence, integrated lab/ diagnostic/ biomarker/
specimen capabilities globally, big data and predictive analytics are some of the biggest needs
• Globally there are well over 1,000 CROs, although the space has been consolidating over the past
several years – moving forward more consolidation is expected
• Top 10 CROs account for 50% of market share, and it is expected that in the coming years there will
be a set of ~5 leading global, fully integrated CROs that command majority of the market share
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Forward Looking Industry Trends
Personalized -Omics
Digital Biomarkers
Bayesian Statistics
Regulatory Harmonization
Big Data & Analytics
Industry “Utilities”
Personalized Trials
Virtual Trials
Smaller Trials
Less Complexity
Better Outcomes
Cost Savings
Emerging Trends Potential Impact
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Perception of Large CRO’s By Pharma
Big PharmaSmall Pharma/ Biotech
• Commodity business
• Little differentiation
• Bureaucratic
• Slow response times
• Too much process
• No nimbleness or flexibility
• No innovation
• Poor technology & data services
• Poor offerings for small pharma
• CRO cost advantage is declining
• Major advantage is global reach
• Commodity business
• Little differentiation
• Focus on process not value-creation
• Lackluster innovation
• Basic technology & data services
• CRO cost advantage is declining
• Major advantage is global reach
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Sample Feedback & Insights from Pharma (I)
“If you look at all the CROs, there isn't a lot out there that
differentiates the top 5, they all can deliver in the indications that you
are interested in…but what differentiates them is the particular people
they have on their team, the relationship you have with them and
discussions about things like quality. You can speak to ten different
people and they will have a different opinion as to who is the best
CRO.” Sr. Director Clinical Research at Genzyme
“Our focus is to figure out more automation across the clinical
development process, make it easier for investigators to work with us,
and engage patients in more meaningful ways using data and
technology” Sr. Director Clinical Innovation at Pfizer
“Pharma continues to struggle with the balance between strategic
partnerships with 2-3 players vs. having the right partners for each
clinical program. The big players are not always the best partners” Sr.
Director Clinical Innovation at Pfizer
“On the lab and diagnostic side, we’ll be looking for more global
integration of specimens and related data, as well as advances in
molecular diagnostics and the digital footprint of patients outside the
clinical setting” Sr. Director Clinical Innovation at Pfizer
“Ph I-II development will increasingly happen in smaller firms – this is
a growth area. But Large CRO’s will have to develop new models and
approaches in order to take advantage” VP Clinical Development for
VC Portfolio of Biotechs
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Sample Feedback & Insights from Pharma (II)
“Large CRO’s are commodities and interchangeable. There is very
little innovation in this industry. It is an industry that is inordinately
focused on process and not value-creation. Time is my most valuable
asset – I’ll take speed over efficiency, and pay for it, yet there are no
creative experiments.” EVP R&D Astra Zeneca
“Large CRO’s remaining advantage is their global reach and
capabilities. We have to partner with them to execute increasingly
complex and global programs. However, they should be creating
more value through their data assets, they should be turning sites into
valuable businesses, they should be cracking the speed problem.”
EVP R&D Astra Zeneca
“There is no differentiation between the large CRO’s. They generally
serve small Pharma poorly; they are bureaucratic, slow,
unresponsive, and inflexible. They are mired in operational processes
& metrics that have little value for the smaller players.” VP Clinical
Development for VC Portfolio of Biotechs
“Ultimately the gap between sponsors & CROs is one of good
governance, transparency, and misaligned incentives. Decision rights
are not well designed, sharing ‘bad’ data doesn’t always happen, &
CRO incentives are process not value driven.” Former SVP PPD
“CRO’s are behind the curve when it comes to big data & complex
analytics – these will be big value drivers moving forward. Clinical
annotation & patient recruitment are also gaps” Former Sr. VP PPD
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Near-term Opportunities for Large CRO’s
Smart protocol design
Trial automation & integration
Real time monitoring & reporting
Big data and analytics (for site selection, patient recruitment, etc.)
Value added services for sites and investigators
Next gen of biomarker services (POC, molecular diagnostics, digital, etc.)
Value-added specimen management and clinical annotation services
Speed to market (adaptive trials, virtual trials, etc.)
Targeted products and services for small/ mid Pharmas and biotechs
Source: www.innoaction.co