CRO growth since ‘06 and the impact of the downturn

By Nick Taylor

- Last updated on GMT

Related tags: Fiscal year, Contract research organization

CRO growth since ‘06 and the impact of the downturn
With the next round of financial results coming up Outsourcing-Pharma takes a look at the growth of seven CROs over the past three years and how the downturn has impacted on them.

After a period of sustained growth for most contract research organisations, depicted in the graph below that shows net revenues in thousands of US dollars since Q1 2006, there has been a collective stumble.

Quarter-on-quarter net revenues for six of the seven CROs on the graph, which excludes Quintiles because it is a private company, began to decline in the second or third quarters of 2008.

This is a striking trend on the graph, which the companies generally attributed to higher levels of delays and cancellations that have resulted from the difficulties facing pharma.

Despite these challenges numerous executives have said that the fundamentals of the business remain strong and there is evidence to support this, with revenues at some CROs levelling off or picking up in the latest financials.

Covance stands apart as the one CRO on the chart that continued to grow its quarter-on-quarter net revenues. The company attributed this slight growth to demand for late-stage services, which have prospered despite the market conditions, although there has been a dip in demand for its early-stage offering.

Results for some of the other CROs plotted showed signs of quarter-on-quarter stabilisation in their Q2 2009 financials. Some flattened off, others experienced small spikes quarter-on-quarter in sales and there is the hope that the bottom of the downward trend has been reached.

Further evidence of this may be present in the next round of financial results, which will be covered on Outsourcing-Pharma in the coming weeks and months.

Net revenues were taken from company results. In cases where companies have different fiscal years the calendar quarter has been taken. For instance Parexel’s Q4 is plotted as Q2 on the graph.

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