An overview of the Contract Research Organisation (CRO) market and its significance in the pharmaceutical and biotech industries.
This guide provides you with the overall market size and trends, key drivers, opportunities and challenges, key suppliers in the category and how to improve strategic supplier partnerships.
Definition
The pharmaceutical and biotech industries are witnessing rapid growth and innovation, driving the need for efficient research and development (R&D) processes. Contract Research Organisations (CROs) have emerged as key partners providing outsourced services across various domains such as preclinical services, clinical trials management, regulatory affairs, and more.
Contract Research Organisations, are external service providers that offer specialised support to pharmaceutical and biotech companies. They play a critical role in accelerating drug development, reducing costs, and enhancing operational efficiency for their clients.
Breakdown of main services offered by CROs:
1. Preclinical Services
Preclinical testing, including in vitro and in vivo studies, to assess the safety and efficacy of drug candidates before human trials.
2. Clinical Trials Management
Planning, execution, and oversight of clinical trials, ensuring adherence to protocols, data collection, and regulatory compliance.
3. Clinical Data Management
Collection, validation, and analysis of clinical trial data, ensuring accuracy and compliance with regulatory standards.
4. Biostatistics and Statistical Analysis
Application of statistical methods to analyze clinical trial data, providing insights on efficacy, safety, and patient outcomes.
5. Regulatory Affairs
Expertise in navigating complex regulatory requirements, ensuring compliance with local and international regulations.
6. Pharmacovigilance and Drug Safety
Monitoring, evaluation, and reporting of adverse events and side effects associated with investigational drugs and marketed products.
7. Medical Writing
Preparation of regulatory documents, study protocols, investigator brochures, and other scientific and medical documents.
Contract Research Organisation Market Trends
The global CRO market has experienced significant growth in recent years, driven by increasing outsourcing trends and the need for specialised expertise. According to industry reports, the CRO market was valued at $41.98 billion in 2023, and it is projected to grow to $57.95 billion by 2028 at a CAGR of 6.66%.
Market size value in 2023
$41.98 Billion (USD)
Revenue forecast 2028
$57.95 Billion (USD)
Growth Rate
6.66.% CAGR from 2023 to 2028
Source: Market Data Forecast
Market trends and key drivers
1. Increasing Outsourcing of R&D Activities
Pharma and biotech companies are outsourcing a larger portion of their R&D activities to CROs to leverage their expertise, reduce costs, and accelerate drug development timelines.
2. Growing Focus on Specialised Therapeutic Areas
There is a rising demand for CROs with expertise in specialised therapeutic areas, such as oncology, neurology, rare diseases, and gene therapies.
3. Technological Advancements and Data-Driven Approaches
CROs are adopting advanced technologies, such as artificial intelligence (AI), machine learning (ML), and big data analytics, to enhance efficiency, data quality, and decision-making capabilities.
4. Regulatory Complexities and Compliance Requirements
The pharmaceutical industry is subject to stringent regulatory frameworks, necessitating CROs to maintain expertise in regulatory affairs and ensure compliance throughout the drug development process.
5. Global Expansion and Emerging Markets
CROs are expanding their presence in emerging markets, such as Asia-Pacific and Latin America, to tap into growing opportunities and leverage cost advantages.
SWOT Analysis
The contract research market presents both significant opportunities and challenges for suppliers, as this SWOT analysis shows:
Strengths
Weaknesses
Strengths
- Expertise in Clinical Research and Development. CROs possess deep domain knowledge and expertise in clinical research, ensuring high-quality execution of R&D projects.
- Access to Specialized Knowledge and Resources. CROs provide access to a wide range of scientific, medical, and technical resources, including specialised investigators, advanced technologies, and global networks.
- Flexibility and Scalability. CROs offer flexible and scalable solutions, allowing pharmaceutical companies to adapt to changing project requirements and resource needs.
Weaknesses
- Quality Control Challenges. Ensuring consistent quality across multiple projects and sites can be challenging for CROs due to the complexity of operations and varying standards.
- Pricing Pressure and Margin Erosion. The CRO industry is highly competitive, leading to pricing pressure and potential erosion of profit margins, requiring efficient cost management strategies.
- Talent Acquisition and Retention. Attracting and retaining top talent is a constant challenge for CROs, particularly in specialised therapeutic areas and emerging technologies.
Opportunities
Threats
Opportunities
- Rising Demand for Personalized Medicine. The shift towards personalised medicine opens opportunities for CROs to support tailored clinical trials and companion diagnostic development.
- Increased Adoption of Virtual Trials and Decentralised Approaches. The COVID-19 pandemic has accelerated the adoption of virtual trials and decentralised approaches, creating opportunities for CROs to provide innovative solutions and virtual trial management services.
- Expansion into Emerging Markets. Emerging markets offer untapped potential for CROs, as pharmaceutical companies increasingly focus on global expansion and access to diverse patient populations.
Threats
- Regulatory Uncertainties. Evolving regulations and regulatory uncertainties pose challenges for CROs in maintaining compliance and adapting to changing requirements.
- Intense Competition and Consolidation. The CRO market is highly competitive, with numerous players vying for market share, leading to potential consolidation and increased competitive pressures.
- Data Security and Privacy Concerns. Handling sensitive patient data and ensuring data security and privacy present ongoing threats for CROs, requiring robust data protection measures.
Key Suppliers
Here is a list of some of the top contract research organizations around the world, in alphabetical order:
- Advanced Clinical
- Charles River Laboratories
- Clinipace
- Clintec
- Covance
- CTI
- Ergomed
- ICON
- IQVIA
- KCR Kiecana Clinical Research
- Labcorp
- Medpace
- Parexel
- Pharm-Olam
- PPD (Thermo Fisher)
- PRA Health Sciences
- PSI
- Syneos Health
- Worldwide Clinical Trials
- WuXi AppTec
How to partner better with Contract Research Organisations
In order to establish better partnerships with PAT suppliers and effectively manage costs without compromising quality, pharmaceutical procurement teams can consider the following strategies:
Clearly Define Project Requirements and Expectations
Clearly communicate project goals, timelines, deliverables, and quality expectations to ensure alignment between the pharmaceutical company and the CRO.
Foster Open Communication Channels
Establish regular communication channels, such as project meetings and status updates, to foster collaboration, address concerns, and ensure transparency.
Establish Performance Metrics and Key Performance Indicators (KPIs):
Define measurable performance metrics and KPIs to monitor the CRO’s performance, track progress, and address any deviations from agreed-upon standards.
Conduct Thorough Cost-Benefit Analyses
Evaluate the value proposition of engaging with a CRO by conducting comprehensive cost-benefit analyses, considering factors such as expertise, quality, timelines, and cost.
Explore Flexible Pricing Models and Contracts
Negotiate flexible pricing models, such as milestone-based payments or risk-sharing arrangements, to align incentives and optimize cost structures.
Streamline Processes and Eliminate Inefficiencies
Collaborate with CROs to identify and streamline inefficient processes, eliminating redundancies, and optimizing resource utilization.
Leverage Technology and Automation
Embrace technological advancements and automation solutions to improve operational efficiency, data quality, and cost-effectiveness.
Develop Long-Term Partnerships for Cost Optimization
Establish long-term partnerships with preferred CROs to leverage economies of scale, improve cost predictability, and foster continuous process improvement initiatives.
