In 2013, R&D spending remained relatively flat and the number of studies started by industry also remained about the same, but outsourcing penetration is increasing. There are now more realistic options for sponsors seeking to outsource large studies. There will be more competition for large studies and the large CROs depend on large studies for their growth.

1. In 2013, R&D spending remained relatively flat and the number of studies started
by industry also remained about the same, but outsourcing penetration is
increasing. There are now more realistic options for sponsors seeking to
outsource large studies. There will be more competition for large studies and the
large CROs depend on large studies for their growth.
CRO REVENUE & BACKLOG
R&D
RESTRUCTURING
Quintiles, PAREXEL, Covance, ICON, and Charles River
Revenue
$24.03B
Backlog
$3.22B
$3.26B
Q1,2013
Merck Announces Global Initiative to
CRO MERGERS & PARTNERSHIPS
Q3,2013
STOCK PRICES FARE OK
June 1st to
December 1st 2013
IHE (Pharmaceutical
Industry Index Fund) is
up 35% for the first 11
months of 2013 vs. the
Dow Jones Industrial
Average which is up
“only” 24% over the
same period
Post-restructuring, Pfizer R&D focused on its top blockbuster prospects
$3.05B
Q2,2013
2013
• IHE is up 18%
• DJIA is up 8%
• Quintiles is up 1%
PAREXEL is down 8%
• ICON is up 13%
• Covance is up 17%
Based on ISR’s market sizing model, we estimate that the top 5 CROs
account for ~50% of the total market and the top 8 CROs account
for ~66% of the market. But overall, sponsors are not overly satisfied
with the outsourcing models currently employed. Fewer than 6% of
respondents are “completely satisfied” with their outsourcing.
Quintiles
Merck
Serono
100
283
283
122
269
308
281
278
259
260
242
238
338
298
264
154
96
100
114
1
2
4
6
3
Q4,2011
Q1,2012
Q2,2012
Q3,2012
Q4,2012
296
240
216
93
5
1
Q1,2013 Q2,2013
ISR Research
www.contractpharma.com
www.fiercebiotech.com
online.wsj.com
www.mercknewsroom.com ir.kkr.com
KKR
Quintiles
PPD
JLL
RPS
Novella
Acurian
BioClinica
PRA
392
319
AQUISITIONS:
PARTNERSHIPS:
CLINICAL TRIAL SUBMISSIONS
326
287
283
Forest Labs to Cut 9% of Workforce
Novartis plots sales cuts in U.K. amid Sharpen Commercial and R&D Focus
R&D restructuring
Eisai slashes U.K. R&D jobs in 'global' restructuring
$23.64 B
$23.31 B
AZ Restructures, To Build New HQ
310
Phase
Phase
Phase
Phase
Phase
0
I
II
III
IV
CoreLab
1st 3 Quarters of 2012
$60.9B $57.8B
1st 3 Quarters of 2013
223
210
R&D SPENDING
STAYS FLAT
90
6
Q3,2013
www.quintiles.com
www.ppdi.com
www.bioclinica.com
www.google.com/finance
www.clinicaltrials.gov
Bloomberg BusinessWeek
Quintiles, PAREXEL,
Covance, ICON, and Charles
River Quarterly Reports
$17.4B $17.2B
$1.6B $1.9B
Pharma
ISRreports.com
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