The GlobalData report found that of the $1.2B increase in revenue, Quintiles made up about one-quarter of that amount with 12% growth, which was driven by the company’s ability to turn its order backlog into revenue and win new orders in its clinical services business especially in Europe and Asia.
GlobalData also attributes the revenue increase to CRO (contract research organization) re-organization. For instance, Covance and Parexel “shuttered operations and laid off hundreds of employees across the globe in efforts to help stem the profit losses in their early-phase segments – a trend which will continue into the near future as demand for early-stage work is being tasked to niche CROs and academic research labs.”
Most of the companies in the report, which include small and large CROs, saw positive annual growth rates in 2012, ranging from 4% for Covance to 22.8% for WuXi. Charles River was the exception as it saw revenue decline by 1.1%, mostly due to foreign exchange rates.
And while the number of licensing deals fell from 40 in 2011 to 36 in 2012, the total licensing deal value rose to $958.9m in 2012 -- a 159% increase from 2011.
“Collaborations have evolved from simple transactional relationships into multi-year, highly integrated strategic engagements focused on shared objectives, mutual investment, and involvement in clinical trial design and drug plan development,” the report says.
Small and Mid-Sized Biotech Opportunities
The report also focuses on the increasingly competitive marketplace for CROs and how they are adding new capabilities specifically aimed at working with small and mid-sized biopharmaceutical companies.
“In a post-patent cliff world, small and mid-sized pharma and biotech companies will become the heart and soul of the drug industry, and will be responsible for the lion’s share of the innovation the industry will see in the future,” the report says.
For example, both Quintiles and Parexel have unveiled market services to help their partners efficiently launch new products and “shorten timelines to peak sales.”
Internal research from Parexel found that 81% of all ongoing development programs originate from sponsors outside of the top 25 pharma companies.
Emerging Markets
GlobalData’s report also estimates that total group revenue for the leading CRO companies increased by 14.6% to $394.1m in 2012 in Asia, Central and South America and Eastern Europe. The regions remain attractive for outsourcing “due to easy access to large patient pools, low labor and manufacturing costs and highly skilled medical workforce.”
Most CROs “are growing their infrastructures in China,” with Parexel opening new sites, Charles River purchasing a controlling stake in Vital River, China’s largest provider of laboratory animal models for preclinical research, and PPD and Quintiles establishing subsidiaries there.