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Improving Biopharma R&D efficiency a mixed blessing for CROs

By Natalie Morrison , 06-Sep-2012
Last updated on 06-Sep-2012 at 13:56 GMT2012-09-06T13:56:56Z

Biopharma research boosting efficiency, good and bad for CROs

Improving efficiency in biopharma research is a “mixed blessing” for contract research organisations (CROs), according to Wells Fargo.

Looking at the database – containing information on current trials – senior analyst Tim Evans noted that though there is a decline in the number of biopharmaceutical clinical trials happening, the rate of new drug approvals remains strong.

“The logical conclusion is that the industry is finally realising long-sought efficiencies,” he told

For CROs in particular, Evans said, better efficacy offers many benefits. “Ultimately, more efficiency will mean healthier pharma companies, and in turn, healthier vendors.”

He also said that the current trend for efficiency measures often means outsourcing non-core activities to CROs, adding: “I think this is slowly starting to happen, and I think the increased use of CROs is one means of driving efficiency into the system.”

Evans said the positive outlook for the new streamlined industry will continue for the foreseeable future.

In 2011, new drug approval rates were on a par with the 1970s for the first time since 2008, when the industry was spending more than ever on research and development (R&D) but seeing fewer drug approvals. He said that in 2012 “is on pace to be similar”.

No news is good news

On the other hand, Evans said streamlining the clinical research industry will also present troubles for providers in the short-term.

“While long-term efficiency is critical for the industry's health, fewer studies to accomplish the same goals could be a short-term headwind for CROs,” he said. “We are already seeing this phenomenon in preclinical research and in Phase I.” 

Evans also warned that later phase providers could experience the same headwind, but that a “large increase in outsourcing penetration is masking any drag for the time being.”

He said however, that as long as CROs continue to add expertise in areas where biopharmas can no longer afford “strictly in-house” resources there will always be a place for them.

He listed resources including regulatory, therapeutic, technological and companion diagnostics as key focuses in years to come.

“In short, CROs are key to helping the industry become more streamlined,” he said.

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