Global spend and outsourcing trend will benefit top 5 CROs, says Icon

By Dan Stanton contact

- Last updated on GMT

Related tags: Contract research organization, Covance

R&D spending is set to continue, with CROs - particularly the top tier - reaping the benefits
R&D spending is set to continue, with CROs - particularly the top tier - reaping the benefits
The top five CROs will increase their market share as pharma continues to up both R&D spending and outsourcing, according to Icon.

At the JP Morgan 33rd Annual Healthcare Conference, Icon CEO Ciaran Murray told stakeholders the contract research organisation (CRO) market is set to grow at around 8% annually over the next five years.

This is due to “a combination of the spend in R&D around the world with the increased penetration in outsourcing,”​ he said yesterday. “The trend that we have seen over the past number of years is continuing and we’re looking at a market that will grow around 8% per annum – a healthy high single digit number.”

Icon itself is looking to “amp up that growth”​ into double digits by continuing an M&A strategy which saw the $144m addition of adaptive trials firm Aptiv Solutions​ last year become its twelfth acquisition since 2008​, but, according to Murray, changes in the clinical trial environment means all the top CRO players will increase their market share.

“Since 2009, the top five CROs has gone from 35% to 40% driven by clinical trials becoming more complicated, more challenging,”​ he said. “With the need to invest more in technology and increase global access, partners have tended to choose larger CROs for these trials as they have [the most attractive] infrastructure, technology and balance sheets.”

Murray predicted these companies - Quintiles, Covance, PPD, Parexel and Icon, according to 2012 revenues - would increase their market share to 46% by 2020.

His views are conservative compared to fellow top CRO Parexel, with CFO Ingo Bank saying in November​ the market share of the top tier clinical outsourcing firms could reach 60% in the next three years, though Bank based this on the top seven.

Also speaking at yesterday’s conference was David King, Chairman and CEO of Labcorp which is set to acquire Covance for $6.1bn​.

He told investors Covance was growing its market share as it is “one of only six or seven CROs that can run a large global complex trial,” and the combination of Labcorp will only boost its service offerings to the pharma world.

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