Set up by The Carilion Biomedical Institute (CBI), the new US firm will operate a Phase I clinical research clinic in Roanoke, Virginia, and expects to begin enrolling subjects in six to nine months.
"This new company will supply much needed Phase I clinical research services to an industry that faces aggressive drug development timelines and is currently facing capacity shortages for Phase I trials," said Daniel Barchi, president and chief executive of CBI.
In 2005 the number of new drugs that entered clinical testing had surged 52 per cent over three years, largely due to new technologies that are allowing high throughput screening of drug targets.
The result has been a jump in demand for early stage clinical testing services, causing backlogs in study scheduling of up to six months.
Also fuelling the demand for early development services is efforts by pharma firms to outsource various stages of drug development in order to improve the cost and efficiency of R&D by moving drug candidates through the pipeline faster, as well as an explosion in small biotech firms who don't have in-house research capacity.
Contract research organisations (CROs) have been largely on the receiving end of this growing outsourcing trend.
The CRO industry now generates between $6bn (€4.8bn) and 10bn a year in revenues up from $1bn just a decade ago.
An estimated 25 per cent of this revenue is generated from early stage clinical work (Phase I/IIa studies), clinical laboratory and bioanalytical laboratory services.
The industry historically posts high operating margins averaging at about 15-20 per cent and as the market remains strong, impressive growth is expected to continue.
CRO giant, Covance has been making major expansions in its US Phase I/IIa drug development capabilities of late, buying eight early-phase clinical development sites from Radiant Research in May.