With drug development costs topping $2 billion, R&D spending at an all time high, and as the global market for clinical trials continues to grow and diversify, there is increasing pressure on the industry to bring drugs, biologics, and devices to market with increased speed and greater efficiency.
Helping to drive much-needed changes in a complex system are clinical trial service providers, many of which are on the cutting-edge in terms of innovation and finding new ways to move the proverbial needle. These partnerships, if viewed as collaborative and strategic, provide sponsors with valued resources allowing them to concentrate on their own core capabilities.
According to Evaluate Pharma, pharmaceutical companies are projected to spend about $144 billion on research and development in 2016, growing to $160 billion by 2020. Many pharmaceutical companies are also choosing to allocate a greater share of development dollars to outsourced providers over internal resources. A number of factors are contributing to and will continue to drive the growth of the pharma outsourcing industry, including increased number of drugs entering early development; added pressure to evaluate potential drug candidates in a timely and cost-effective manner; and increased regulatory scrutiny from the FDA and other governing bodies.
Additionally, Evaluate Pharma analysts say, the shift of development dollars from blockbusters to niche busters — medicines for smaller, targeted populations — and continued pressure from insurance carriers to rein in drug prices, is increasing the need for pharmaceutical manufacturers to shorten product development cycles, reduce fixed costs and generate efficiencies by outsourcing a greater percentage of functions including R&D, clinical trial management, manufacturing, and analytical testing.
A Specialty Transformation
According to the analysts at Roots Analysis, over the last few years, a structural transformation in the primary CRO business model to a more strategic approach has revolutionized R&D outsourcing. Newer players providing specific capabilities in the R&D value chain have witnessed a gradual acceptance. In its research, Research and Markets has identified more 200 specialty CROs from among more than 1,000 CROs based on their specific capabilities and the range of services they provide. These specialty CROs collectively cater to the multitude of research services required by drug developers.
Furthermore, the United States with about 115 specialty CROs, has emerged as the primary hub of specialty CROs; this is followed by Europe with about 60 CROs. India and China, where CROs offer a relatively higher cost optimized service portfolio, are emerging as new destinations; the level of activity, however, has been fairly limited so far.
Roots Analysis also found that though the broader contract research market is highly consolidated and dominated by a handful of bigger CROs, the market within the specialty CRO segment is highly fragmented. This is unlikely to change as biotech companies will continue to prefer outsourcing specific requirements of the clinical trials instead of outsourcing the entire clinical trial program to an individual CRO.
Analysts say they expect the overall market of specialty CROs to more than double in the coming decade, growing at a CAGR of 8.6%. Specific areas of growth are likely to be driven by novel services and upcoming technologies resulting in cost optimization and improved outputs.
Some of the niche opportunity areas/approaches include health economics and outcomes research (HEOR), adaptive trial designs, and eClinical solutions. Specifically, these areas typify a growing unmet need and represent untapped areas making outsourcing an attractive option.
Editor’s Note: Throughout this issue, nearly 100 thought leaders from all aspects of the clinical arena provide their insights on the future of clinical trials and drug development, and don’t forget to check out exclusive bonus content at pharmavoice.com. (PV)
