US biotech boom to benefit CROs

As a result, this market segment, already worth $7.4bn, is likely to reach $19.4bn in 2013, according to new analysis from Frost & Sullivan.

CROs are already being increasingly relied upon by biopharma firms in many aspects of drug discovery due to the lack of internal expertise and infrastructure within many of these companies, as well as the mounting costs of drug development and stringent regulatory guidelines.

Biotechnology companies in particular present a real growth opportunity because they are typically small and have very limited investments in development infrastructure compared to their pharmaceutical counterparts.

What is more, the number of biotech firms is escalating due to the trend towards biologic drugs coming through the pharma pipeline.

According to Datamonitor, annual sales of biologic products, such as therapeutic proteins, monoclonal antibodies and vaccines, will have increased by $26bn by 2010, compared to a $13bn increase for small molecules.

This trend, which shows no sign of slowing, will naturally result in greater business volumes for CROs from the biotechnology market.

For CROs offering drug discovery services in this rapidly growing market is becoming highly competitive. Achieving the right breadth and depth of services can prominently position CROs for success, said the report, titled: "U.S. Drug Discovery Contract Research Organization Markets."

In particular, CROs can achieve this by shifting from the traditional route of drug discovery to the emerging "proof of concept" model, it said.

"The complexity of the drug discovery process necessitates a high degree of technical change to drive innovation and achieve greater efficiency in commercially launching products," said research analyst Barath Shankar S.

"As the market continues to enlarge, the trend of deepening focus on core expertise is becoming crucial."​

Furthermore, the analyst believes that the increase in globalisation of clinical trials is also likely to result in several CROs expanding geographically as well as gaining new capacities in order to cater to this opportunity and gain market advantages - achieved through a mix of organic and inorganic growth strategies.