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Statistics and headlines don't portray a pretty picture of
the economies in Europe or in the United States. Adding in the next layer
specific to the clinical research and trials industry, and the picture in
the past two years continues to be complex and changing. It is not just one
force—the economy—at play. Other aspects include spiking
regulatory requirements; increasing global complexities; and the diminishing
blockbuster drug model.
But the economy is certainly applying more than its fair share
of pressure onto the conduct of drug development. The other dimensions are
the technologies, outsourcing strategies, and mergers and acquisitions that
have resulted from the downward forces.
Figure 1.
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Annual job losses in the overall pharmaceutical industry in
November 2011 were 20,000, which were significantly lower than the cuts
posted from 2010's 50,000 number. The pharmaceutical industry ranked
sixth on the 2010 list of annual job-cut rankings, below government,
financial, retailing, aerospace/defense, and healthcare.
Figure 2.
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For the time period January 2011 to July 2011, the
pharmaceutical industry shed 18,264 jobs and for the same period this year
8,968. And while the reasons for job cuts were not cited by individual
industries in the early August Challenger, Gray & Christmas jobs report,
the top five reasons for job-cutting across industries are: restructuring,
closing, cost-cutting, economic conditions, and loss of contract.
However, while job cuts may be leveling off in the
pharmaceutical industry, planned hiring is not in the cards. In the jobs
report, for industries planning to hire, pharmaceuticals were in the bottom
three. In fact, in another report, earlier this year, smaller to mid-size
biotech companies were the ones more likely to predict growth versus
one-third of larger companies. In an Aon Hewitt report, less than 5% of the
small- to mid-sized biopharma companies expected their staffing to decrease,
compared to 15% of the larger sponsors.
Table 1.
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With all of the downsizings, and seemingly less or non-growing
staff to handle the workload, the larger pharmaceutical companies are tasked
with merging internal capacities, weeding out redundant departments and
positions, and figuring out what to do with the capabilities in which they
will no longer invest. Among these companies, outsourcing is the key to
getting work done.
In a January 2012 Annual Global CEO Survey from
PriceWaterhouseCoopers, it found that 43% of biopharma CEOs had outsourced a
business process function in 2011. This compares with all other industries,
where CEOs reported 35% to the outsourced business function question.
In a survey that Applied Clinical Trials
conducted in August, results found the following top three
outsourced functions: full-service CRO, 41.3%; monitoring, 21.7%; and
subject recruitment, 13%.
Table 2.
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All of this outsourcing activity translates into additional
downstream trends. The first is the ability of both the sponsor and its
outsourced partner to effectively manage the outsourced relationships. And
second, is that it could mean a boon of sorts to contract research
organizations.
Both trends come to light in separate surveys. The first we
conducted in August, where we asked: "Has your need to provide
oversight of these sourcing relationships changed over the last two
years?" The responses were weighted toward a definite increase at 62%.
And the second trend, what it means to CROs, the Salary and
Career Development Survey conducted in September and October by CenterWatch
and Applied Clinical Trials found that respondents working
for CROs were significantly more likely to see a positive change in the
economy compared to sponsors or investigative site respondents.
Table 3.
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In his September 2012 column, Ken Getz offered a more targeted
analysis of the CRO market size in the United States. From Tufts CSDD data,
it surmised a total of 21,000 US jobs in the clinical research segment; 643
total companies, and the total share of US personnel comprises 13%
worldwide. Its analysis, which includes regulatory services, has the
clinical research market valued at $6.5 to $8 billion. Approximately 17% of
the companies providing these services are publicly traded.
Figure 3.
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In other reports, the forecasts are for growth in global CRO
market size and penetration. Business Insights forecasts the market to be
$35 billion next year, and Frost & Sullivan anticipates Compound Annual
Growth Rate of 10.5% through 2017. William Blair & Co. expects the
current outsourcing penetration rate to increase by a few percentage points
over the next year or two, and CRO management commentary suggests that over
the next five to seven years the outsourcing penetration percentage could
increase to more than 60%. Its model currently anticipates a 10% increase in
penetration from 2010 through 2015. What this all means is that pharma is
relying on CROs and service providers more than ever in its clinical
research. 
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