Contract research organizations (CROs) are increasingly entering into long-term contracts with pharmaceutical companies under which they provide multiple services. GlaxoSmithKline has just announced negotiations with Parexel International for such a partnership and stated that it plans to reduce the number of the CROs it works with from 30 to a few. Parexel also has long-term contracts with Eli Lilly and Bristol-Myers. Large CROs, including Covance, Icon and Quintiles Transnational, are benefiting from this trend. Wells Fargo estimates that 50% of the market belongs to the top five CROs. Smaller CROs are utilized by small and mid-sized drug companies, but mid-sized CROs, such as Kendle International, PRA International and PharmaNet Development, could suffer due to the trend. Wells Fargo analyst Greg Bolan suggests mid-sized CROs merge or access private equity in order to grow. INC Research and PharmaNet were acquired by private equity firms. A quarter of clinical trials are now conducted by CROs and will rise to 60%–70%, according to Bain & Co.

Source: Dow Jones