Interview Synopsis

CRO Sector Q2 2023 Update – Industry Developments & Competitive Dynamics

  • Private Equity
  • Healthcare
  • North America

Smaller and medium-size contract research organisations (CROs) are gaining share at the expense of larger players as the landscape changes and the latter are slow to adapt, a former director at Cytel told Third Bridge Forum. Lack of adaptation to digital technology, increased price sensitivity, reduced agility and a high clinical trial abandonment rate were cited as the main factors hurting the larger players.

Incumbent CROs falling behind amid “dramatic” industry shifts

Oncology and haematology projects typically go to the larger CROs because they are seen as sophisticated and there is sometimes a concern that smaller CROs may not have the requisite expertise. “There is some brand loyalty to the CROs, but not necessarily when you jump to other therapeutic areas,” the specialist said.

On Syneos’ acquisition by a consortium of private equity investors, our specialist said despite Syneos’ recent challenges, “there’s room for them to come back”. The expert believes the buyout presents a “turnaround opportunity” after poor management decisions, lack of a haematology and oncology presence, and no data ownership jeopardised the company. 

On Labcorp’s divestiture of Covance and its rebranding to Fortrea, our expert sees this as a “marketing effort to show that the company is freshening itself up”, which customers may ultimately “see through”. 

Overall, the Interview revealed that the CRO space is “relatively flat” but the market access space is growing 15-20% a year, and the health economics and real world space is growing at about 25-30% a year. The clinical trial space has matured and is no longer a high-growth area, though driven by oncology and haematology – particularly immuno-oncology which facilitates personalised medicine.

We also heard there is “reasonable consolidation” as companies explore adding new capabilities in areas such as AI, analytics and patient recruitment. The “future” is data acquisition – real world as well as genetic and genomic data. “I do think the consolidation is going to continue, but it’s going to change, which is they’re going to buy AI and ML development companies and they’re going to be buying DNA data companies. That I think is where this marketplace is heading,” the expert said.

Click here to access all the human insights in Third Bridge Forum’s CRO Sector Q2 2023 Update – Industry-wide Developments & Competitive Differentiation Interview.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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