Global CRO deals value rockets to almost $10 billion between Jan- April 2015: GBI Research

Struggling to balance R&D expenditure and profitability, pharma companies are outsourcing R&D and clinical trial activities to CROs to improve cost effectiveness

The total number of deals in the global Contract Research Organization (CRO) market reached 700 between January 2010 and April 2015, achieving an overall value of $33 billion, says business intelligence provider GBI Research.

The company’s latest report states that 2015 has already contributed the most to the overall deals value during this period, with $9.86 billion achieved between January and April this year alone, representing an almost fourfold increase from the $2.5 billion reached in 2014.

This impressive growth was significantly bolstered by Laboratory Corporation of America’s (LabCorp) record $6.1 billion acquisition of Covance in February 2015, enabling LabCorp to strengthen its laboratory and CRO service offerings. In its bid to acquire Covance, the company also issued debt offerings of $2.9 billion.

Priyatham Salimadugu, Associate Analyst, GBI Research says, “While acquisitions achieved the highest deal value globally between January 2010 and April 2015 as a result of this transaction, venture financing represented the highest number of deals during this period, with 134.

“The US was the top market for overall CRO deal activity with 337 deals, accounting for a 48 per cent share of the global total, largely due to the majority of leading CROs being head quartered in the country.”

The report adds that pharma companies have struggled to balance research and development (R&D) expenditure and profitability over recent years, due to rising drug development and clinical trial costs, as well as rigorous regulatory and quality assurance requirements.

As a result, these companies are outsourcing R&D and clinical trial activities to CROs to improve cost effectiveness. CROs have developed operational strategies to maximise their business opportunities in response to this, by entering new geographies and adding new services.

Salimadugu continues, “Among the CRO market leaders is Quintiles, which generated revenues of $5.4 billion in 2014. “Quintiles was able to drive ahead of its peers with its product development services, namely phase II–IV clinical trials, and integrated healthcare services segments, boosted by the company’s global presence,” the analyst concludes.

EP News Bureau – Mumbai