BioPharmArena.com

as presented by Dr. Jayashree, Officer –Clinical Services, SPIC Pharma

Data monitor estimated that pharmaceutical and biotechnology companies spent approximately $33 billion on R & D in 1997, out of which an estimated $3.8 billion was used for the outsourcing services offered by the CRO industry. Data monitor’s figures for 1998 show that the CRO industry grew by approximately 11 percent, thus expanding the market size to $4.2 billion. (1) So, the CRO market is expanding at a steady pace, a trend that is likely to continue in the near-term future. Therefore, pharmaceutical companies will need to re-evaluate their perceptions of, and relationships with, CROs – particularly if the strategic direction of the CRO market is about to change.

The CRO market is dominated by four companies, which hold over 50 percent of the total market. The largest is Quintiles, whose revenues passed the $1 billion mark in 1998 (39 percent growth). Its market share amounts to 28 percent, followed by Covance with 17 percent, Parexel with 7 percent and PPDI with 6 percent. Other CROs include ClinTrials Research, Kendle International, Applied Analytical Industries and Phoenix International Life Sciences. The major companies grew by over 20 percent in 1997-98, a figure higher than for the market as a whole. This resulted from a trend for rapid growth – through acquisitions – among the big CROs, which is not reflected in the rest of the market. The negative growth of the rest of the CRO market can be explained by the fact that many of the major CROs are buying smaller players, thus reducing the size of this market segment.

A recent UBS Warburg study revealed that of the US$38 billion that the US pharmaceutical industry invested in R&D in 2002-2003, around 20%-25% of this was spent on outsourcing. Given time, cost, and pipeline pressures in pharmaceutical manufacturers, together with the increased regulatory requirements, UBS Warburg predicted that this outsourced portion of pharmaceutical R&D spend would expand by a minimum of 2% per year throughout 2005 - 2007. (2)

In 2003, the global pharmaceutical industry was estimated to have spent US$63 billion on R&D, with around 40% of this being devoted to clinical trials. According to another estimate by PhRMA and ING Barings LLC, outsourced clinical phase I-IV market in 1998 was about US $4.4 billion and is projected to grow to US $12.8 billion in 2007. Around 80,000 clinical trials are being conducted globally each year.

Outsourcing trends indicate a strong future. Outsourcing expenditures have grown at a 21% compound annual rate since 1995 to an estimated US$5.1 billion in 2000. For 2002, the CRO industry exceeded US$6 billion. Advances in genomics and proteomics are revolutionising the way drugs are being discovered by pharmaceutical companies and this will lead to an increased demand for clinical trials. The leading pharmaceutical companies have set aggressive goals for drug development in the coming decade. Interestingly, Dr John Stageman, Global Vice- President of Enabling Technologies at AstraZeneca, recently concluded that, if AstraZeneca could ‘turn the clock back’, it would be far more proactive in outsourcing areas of its R&D. (2)

It is estimated that the revenue potential for contract clinical research services including services provided by CROs, investigative sites, couriers and clinical labs will reach $75 million in 2005 and $300 plus million in 2010. Analysts project that by 2008, up to 30% of global clinical trial activities will take place outside of the U.S and Western Europe due to high demand for study subjects and well trained clinical research professionals. China, Eastern Europe and Latin America are several key markets earmarked for rapid growth in clinical research grants.

CROs are also expecting a big boost from government spending thanks to national security and privitatization initiatives by the Bush administration. Covance CEO Chris Kuebler talked about “strong efforts” by government agencies to outsource to CROs “at levels never before seen”, and a story in the Washington post in July 2003 indicated that research positions at the National Institute of Health are included in the Bush administration ‘s program to outsource more government activities to private firms. (3)
Revenue for the contract services industry grew approximately 13% for the January –March quarter, but preclinical, phase I and bioanalytical and laboratory services revenues jumped more than 20% at many companies .Industry executives pointed to increased spending by both Big Pharma and small pharmaceutical –biotechnology companies as a reason for the activity growth.

In fact, capacity shortages may be emerging for preclinical and phase I services. Aside from taking advantage of the situation to raise prices, most CROs are adding capacity, either through expansions of existing facilities or through acquisitions.

Performance of phase II-IV services at most CROs was much less robust because of low level of new contract signings in 2003. According to many industry observers, phase IIIb (testing for additional indications) and phase IV studies (marketing and pharmacovigilance) are in the strongest demand. Nevertheless, CRO executives indicated that the flow of new RFPs and contract signings was strong.

In fact, clinical and preclinical CRO executives are so upbeat about the demand for outsourced development services that many companies raised their 2004 revenue and profitability projections. The optimism reflects both the increase in study volume and a firming of the pricing environment. CROs have commanded price increases for preclinical work and have said that pricing for Phase II-IV services stabilized after some intense price competition the late last year. (3)

References

(1) Datamonitor report, February 2000.
(2) Pharmaceutical Outsourcing Contract Research Organisation 2003,UBS Warbarg LLC.
(3) Pharmaceutical Technology September 2004.

This information has been published by the International Biopharmaceutical Association www.ibpassociation.org . Please note this information does not give any medical advice.

Hugh Davis

Why are there not enough Quality Assurance Specialists for the on the market and why is it important to train the new specialists out of other professions with the right educational background?

In fact, the market is currently expanding faster than the production of new qualified professionals which inevitably creates a demand. Most people are under the impression that the barriers to enter this industry are extremely difficult to overcome, but the truth is that everybody working in this industry had to start somewhere and as the industry grows positions need to be filled. Now the question is: how will this be accomplished? One way of filling the vacuum is to take specialists from other professions and turn them into professionals for this industry. This has several added benefits of its own. For instance bringing specialists from other professions or industries actually diversifies the workforce and brings new perspectives to the biopharmaceutical industry. This in turn is a source of innovation where multiple disciplines are being united and new perspectives are made more apparent.

Of course, the need for training is obvious for specialists that are re-aligning their careers as well as for individuals that are entering the industry as new graduates. Most of the skills and knowledge required in positions such as Clinical Research Associates (CRA’s), Clinical Data Managers (CDM’s), Quality Assurance Specialists (QA) and Marketing Managers are not covered in university courses. Even where an individual has been through a specially designed training program for the position through an academic institution, the training may not involve a practical component in which case the individual still lacks certain skills. This should re-emphasize the importance of practical training programs for the biopharmaceutical industry.

he educational system does not appear to produce enough graduates to meet the demand for entry level positions like CRA, Data Manager Specialists, Quality Assurance Specialists and Marketing and Management specialists. Skill shortages also affect the ability of regulatory agencies to keep abreast of scientific advances and to efficiently review the increasing number of new products. The diverse range of skills required along with the dramatic pace of change is not reflected in current university courses. The shortage of specialists could be felt in other areas too. For example, bioinformatics requires a background in genetics, statistics, and software development, but most graduates lack such multi-disciplinary training. Also, there are not many undergraduate degree programs in QA in biotech; specialization options are normally offered within more traditional programs.

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Hugh Davis is a Senior Instructor , Kriger BioPharmaceutical Training Program http://www.kriger.com/training/ , info@kriger.com