Early phase CROs may suffer from the aftereffects of a mega-merger, CEO says

By Zachary Brennan

- Last updated on GMT

Early phase CROs may suffer from a mega-merger, CEO says
As the Pfizer-AstraZeneca mega-merger seems to be pushing towards a deal, early phase CROs may be the first to suffer for a short period of time directly after the merger is complete, some say, while others don't seem to think there will be much of an impact at all.

While the overall trend is positive, mega mergers always, from our perspective, come with an expectation of a period of uncertainty and chaos tied to early phase research​,” Profil Institute for Clinical Research CEO Marcus Hompesch told Outsourcing-Pharma.com. 

Hompesch said he expects that for between about six and nine months after the merger, early phase CROs may see their project pipeline take a hit as the companies re-assess “a lot of their early phase work​.” 

However, once the early phase work “has been sorted out,​” outsourcing penetration will grow, Hompesch added, echoing sentiments felt by the largest CROs. 

CEOs at Quintiles, Covance​, Icon and Parexel​ all stressed in recent conference calls that this type of consolidation usually leads to more outsourcing work rather than less. Despite those sentiments, CRO stock values fell slightly​ between 3% and 7% after the megamerger was first announced, and following a deal in between Novartis and GlaxoSmithKline​. 

Hompesch added that he’s positive on the prospects for Profil should AstraZeneca and Pfizer decide to merge. 

I’m not too negative about it, but it may not be so easy for smaller, early phase research companies​,” he said.   

Little Impact

Others, however, don't seem to see the negative impact, arguing that only the larger CROs will feel the pushback from a Big Pharma deal.

Clinipace CEO Jeff Williams told us: "At our size, we see very little negative impact, and here's why: In the land of big pharma, the big CROs battle it out for these strategic partnership deals. For these partnerships to exist, a company must have a portfolio of products, or at least multiple large-scale projects that can be packaged into a discounted bundle.  Smaller CROs are not usually in the battle. So essentially the market share up for grabs in these deals is just that which exists in the big pharma sector​."  

Small and mid-sized pharma and biotech companies, he added, "rarely have a portfolio that can be packaged in a way that single sourcing to one strategic CRO partner makes sense. Doing so is too risky for these companies​." 

"And as the big CROs land more of this business, they become bigger themselves and increasingly less competitive in the mid-market because they become less attractive to it​," Williams said.

Related news

Show more

Related products

show more

Using Define-XML to build more efficient studies

Using Define-XML to build more efficient studies

Content provided by Formedix | 14-Nov-2023 | White Paper

It is commonly thought that Define-XML is simply a dataset descriptor: a way to document what datasets look like, including the names and labels of datasets...

Overcoming rapid growth challenges with process liquid preparation

Overcoming rapid growth challenges with process liquid preparation

Content provided by Thermo Fisher Scientific - Process Liquid Preparation Services | 01-Nov-2023 | Case Study

A growing contract development manufacturing organization (CDMO) was challenged with the need to quickly expand their process liquid and buffer preparation...

Why should you use clinical trial technology?

Why should you use clinical trial technology?

Content provided by Formedix | 01-Nov-2023 | White Paper

New, innovative clinical trial technology is helping to revolutionize the research landscape. COVID-19 demonstrated that clinical trials can be run much...

Related suppliers

Follow us

Products

View more

Webinars