Over the past 12 months, the clinical research outsourcing (CRO) industry has taken its next decisive steps in the evolution of a business making its mark in drug development.
The Institute of Crisis Management defines a crisis as “any problem or disruption that triggers negative stakeholder reaction and that could impact the organization’s financial strength and ability to do what it does.” In the pharmaceutical setting, a crisis could mean an adverse clinical trial event, the bankruptcy of an essential service provider, or a serious product recall. It could be an event that is within the company’s control and has been mishandled, or an external situation that forces the business to change its strategic course, either temporarily or permanently.
The biologic drug market is growing at nearly twice the pace of the overall pharmaceutical market, driven by major therapeutic fields under research such as oncology and autoimmune diseases. The forecasted 20% annual increase in biologic active pharmaceutical ingredient (API) demand between 2011 and 2017 combined with the growth of biosimilars will generate a positive environment for the biologics contract manufacturing organization (CMO) market to grow at 9% per year over the same period.
he following companies are the 10 largest small-molecule contract manufacturing organizations (CMOs) by revenue. While many of the firms also contain biologics businesses, where possible only the relevant small-molecule revenues have been counted.
Commoditization in the CMO market is driving the leading players to niche services. The sector is struggling to deliver consistent growth.
With the pharmaceutical sector currently in the middle of such a transformative cycle, are drug developers or the firms providing them with outsourced research or manufacturing services going to find themselves similarly left behind?
Low-cost and skilled workforces in China and India have positioned both countries as increasingly important manufacturing hubs for pharmaceutical companies, as they seek to contain costs while retaining quality outsourcing partners.
Despite the apparent inevitability of the contract manufacturing organization (CMO) sector’s growth in China and India, a recent wave of scandals has put significant dents in the reputations of both countries as locations for foreign firms to manufacture drugs. Rising costs have also caused some firms to question whether using one of the region’s many CMOs is worth the risk.
The concept of a drug development partnership between CRO and sponsor is the latest strategic evolution in the search for efficiency and innovation in the biopharmaceutical world.
An initial study of the only publicly available data detailing clinical trial starts where contract research organizations (CROs) were named as a collaborator in 2013 shows a 10% lessening in work to the service provider industry.
For public contract research organizations (CROs), the financial story in 2013 was one of solid and steady growth. Revenues grew and company-estimated forecasts for 2014 are also positive.
By any standards, last year was a turbulent one for the pharmaceutical sector. The patent cliff claimed some of the industry’s most profitable properties and with the market share of these drugs losing ground to generics, put even more pressure on the top- and bottom-line performance of key players such as Eli Lilly and AstraZeneca, to name just two of the worst hit.
Such pressure – and the drive to cut fixed costs that goes with it – has been a boon for clinical CROs, which have become increasingly indispensable to the business of drug discovery, as clinical development is outsourced and specialist units, such as clinical laboratories, are offloaded to CROs in long-term guaranteed strategic partnerships.
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