“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.
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.