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PharmaSphere: Global Dealmaking and Operations Strategies in the CRO Market

Published By :

GlobalData

Published Date : Sep 2013

Category :

Therapeutic Area

No. of Pages : 125 Pages


PharmaSphere: Global Dealmaking and Operations Strategies in the CRO Market report covers the dealmaking activity and infrastructure investments of over 50 public and privately held contract research organizations. This report discusses and analyzes over 60 strategic deals struck by large and niche/specialty service providers. GlobalDatas Industry Dynamics team evaluates the strategic drivers, fit, acquisition costs and revenue potential of these deals to illustrate the strategies different contractors are using to gain market share.

Highlights

About the Report

The report is organized into four geographies (North America, Europe, APAC and Emerging Markets) providing a drill-down analysis of each segments revenue and growth leaders, partnership and deal activity, and operations footprint. Each region has an Operations and Global Service Delivery section, which discusses how CROs are deploying their physical resources, and how they intend to use plant expansion to meet the needs of their customers. Lastly, this report provides GlobalDatas outlook on the CRO sector and each companys future competitive position.

The CRO market is highly fragmented made up of some 1,000 individual companies, most of which are privately owned. These companies vary significantly in size and breadth of services from a four-person bioanalysis research lab in Thailand to companies like Quintiles and Covance, which have tens of thousands of employees in over 100 countries across the globe. GlobalDatas coverage examines these CROs through a unique company-centric lens combining financial performance and resources allocation with partnering activity and regional developments to assess a companys overall strategy. This type of coverage is unlike any other analysis available, and delivers a consistent view into the evolution of these companies corporate growth. We also covered some 40 other privately held CROs to give our analysis more specificity and granularity.

Key Questions Answered

  • What are the reasons for increased activity in strategic deals by leading and promising contract research organizations?
  • What drivers accounted for the revenue growth for the company over the past year?
  • Which trends will affect the CRO marketplace over the next few years?
  • What particular services or capabilities are my competitors developing?
  • Who are the revenue, and growth leaders in each region?
  • What specific business development activities are taking place, in terms of partnerships or M&A?
  • How are CROs growing their physical infrastructures and human resources to better serve the needs of their customers?
  • What region-specific operations and capabilities are CROs adding to gain share in the emerging markets?

Scope

  • This report provides analysis of the key drivers and trends shaping the global CRO market; including biologics manufacturing, emerging markets, and eClinical technologies
  • This report offers a deep dive into the synergies behind partnering and acquisition activity
  • The report contains a discussion of regional segment strategies
  • Firm utilization, resources management, and efficiency metrics
  • Leadership/Management Changes

Reasons to buy

  • Analyze and track the strategies that these CROs are using to gain share in the increasingly competitive market
  • Use this information as an independent source for your due diligence and transaction strategy
  • Organize your sales and marketing strategy to identify companies with proprietary technologies to maximize opportunities for strategic investment or partnerships
  • Understand the various factors when structuring deal terms
  • Leverage this report to identify potential take-over targets, to select vendors, or to profile CRO services/therapeutic expertise
Table of Content

1 Table of Contents 7

1.1 List of Tables 13
1.2 List of Figures 13

2 Introduction 15
2.1 Report Scope 15
2.1.1 GlobalData Selection Criteria 16
2.1.2 Companies Covered 16
2.2 Upcoming Reports 17
2.3 Recently Published Reports 17

3 CRO Market Dynamics 18
3.1 Outsourcing Service Delivery Models 18
3.1.1 Fully Integrated Service Model 18
3.1.2 Functional Service Model 19
3.1.3 The Bottom Line: Use a Hybrid Approach 19
3.2 Quintiles Goes Public 20
3.2.1 Quintiles IPO Raises $947M, Pricing an Increased Number of Shares at Top Range 20
3.3 Weak Demand for Preclinical Services Causes CROs to Economize 20
3.4 CROs are Transitioning into Becoming Experts in Biologics Manufacturing 22
3.4.1 WuXi Will Become a Leader in Biologics Manufacturing through its Multi-pronged Strategy 23
3.4.2 Catalent Opens New Manufacturing Center for Biologic Drug Development 25
3.4.3 ShangPharma Inks Two mAb Partnerships 26
3.5 Emerging Locations in Asia Will See the Greatest Investment and Growth 27
3.5.1 Location, Location - Footprint Growth Has Become More Important than Cost Reduction 27
3.5.2 Will Concerns about Patient Safety Bring Down the Indian Clinical Trial Market? 29
3.6 eClinical Technologies Will be Key Drivers to Accelerating Time-to-Market 30
3.6.1 Icon and Cerner Team Up to Streamline Late-Phase Studies 31
3.6.2 Parexel Introduces MyTrials Platform 31
3.6.3 INC Research Expands Partnership with Medidata Solutions 32
3.6.4 Quintiles Unveils its Next-Generation Infosario Analytics Platform 33
3.6.5 Covance Launches Xcellerate to Increase Clinical Trial Optimization 33

4 Collaboration and Acquisition Strategies 34
4.1 Overview 34
4.2 M&A Analysis 38
4.2.1 KKR Makes a Splash into CRO Biz with PRA Buy 38
4.2.2 Quintiles Invests in Personalized Medicine 39
4.2.3 Patheon Completes Purchase of Banner Pharmacaps 39
4.2.4 Clinipace Doubles in Size with Paragon Buyout 40
4.2.5 Accenture Complements its R&D Service Offerings with Acquisition of Octagon 40
4.2.6 Catalent Pharma Buys Aptuits CTS Business 41
4.2.7 Charles River and Covance Expand Microbial Identification Capabilities 41
4.3 Strategic Partnerships with Large Pharmaceutical Clients 42
4.3.1 Quintiles and Merck Serono Announce Innovative Clinical Development Partnership 42
4.3.2 Charles River and AstraZeneca Align to Accelerate Drug Development 43
4.3.3 Covance Deals 43
4.3.4 Pfizer Improves Clinical Trial Flexibility with Icon and Parexel Partnership 44
4.3.5 Aptuit and GSK Extend Strategic Alliance 44
4.3.6 INC Research Enters into FSP Collaboration with Astellas 45
4.3.7 PRA Announces Strategic Biosimilar Development Agreement with Amgen 45
4.3.8 Parexel and Catalent Combine Core Competencies to Streamline Supply Chain 46

5 Regional Analysis 47
5.1 Overview 47
5.2 North America Landscape Assessment 50
5.2.1 Pharmas Large Revenue Base in North America Continues to Drive CRO Sector Growth 50
5.3 Strategic Partnerships 52
5.3.1 Covance Collaborates with M2Gen and BioPontis Alliance 52
5.3.2 AMRI Signs Agreement to License its Novel Tubulin Inhibitor Program to Chai Therapeutics 53
5.3.3 Ockham Completes Acquisition of Nexus Oncology 54
5.3.4 Synteract and HCR Combine to Form Multinational CRO 54
5.3.5 Accelovance Buys Radiants CRO Division 55
5.3.6 Theorem Forms Relationship with IVD Consultancy Emergo Group 55
5.4 Operations and Global Service Delivery 57
5.4.1 AMRI Realigns its Drug Discovery Services 57
5.4.2 PPD and Icon Grow Bioassay Capabilities in the US 57
5.5 Revenue and Growth Leaders 59
5.5.1 Revenue 59
5.5.2 Revenue Growth YtY 61
5.6 Europe Landscape Assessment 62
5.6.1 European CRO Market Witnessed a Significant Pullback in Growth 62
5.7 Strategic Partnerships 64
5.7.1 TFS International Acquires Italian CRO Dimensione Ricerca 64
5.7.2 Quintiles Signs Deal to Bring Almiralls LAMA Therapy to the UK 64
5.7.3 Icon Selected by European Pharma Companies as a Global Strategic Partner 65
5.7.4 CromSource Adds Early Phase Research Unit in Partnership with CRC 65
5.7.5 Covance Inks Tech Transfer Deal with Frances Inserm Transfert SA 66
5.8 Operations and Global Service Delivery 67
5.8.1 Patheon Invests in its SoluPath Program in the UK 67
5.8.2 Celerion Expands Belfast Facility with Containment Room for Biologics Studies 68
5.8.3 Harlan Labs Announces Major Investment in Switzerland 68
5.9 Revenue and Growth Leaders 70
5.9.1 Revenue 70
5.9.2 Revenue Growth YtY 72
5.10 Asia-Pacific Landscape Assessment 73
5.10.1 APAC Market Remains Hot for Clinical Outsourcing 73
5.11 Strategic Partnerships 76
5.11.1 Japanese CROs Grow their Domestic Footprints 76
5.11.2 AMRI Drives SmartSourcing Strategy in Japan 77
5.11.3 Covance-BML Boost Clinical Trial Lab in Japan 77
5.11.4 EPS Corporation Separates Business Units to Streamline Efficiency 78
5.11.5 Frontage Hired by Local Chinese Clients to Develop Drugs Overseas 78
5.11.6 DKSH Expands Services in South East Asia 79
5.12 Operations and Global Service Delivery 80
5.12.1 GVK BIO Selects New Distributor in Taiwan 80
5.12.2 Max Neeman International Grows Regional Footprint 80
5.12.3 ClinTec International 81
5.13 Revenue and Growth Leaders 81
5.13.1 Revenue 81
5.13.2 Revenue Growth YtY 83
5.14 Emerging Markets Landscape Assessment 84
5.14.1 BRICs and Other Emerging Regions Still Represent Huge Untapped Markets for R&D 84
5.15 Strategic Partnerships 86
5.15.1 Central and Latin America 86
5.15.2 Emerging EMEA 87
5.15.3 China 89
5.15.4 India 90
5.15.5 Rest of Asia 91
5.16 Operations and Global Service Delivery 94
5.16.1 Expand Strategic Investment in Emerging Markets to Support Business Growth 95
5.17 Revenue and Growth Leaders 99
5.17.1 Revenue 99
5.17.2 Revenue Growth YtY 100
5.17.3 Global Laboratory Accreditations and Certifications 101

6 Firm Utilization 103
6.1 Excerpt from CRO Benchmark Report: Heat Mapping 104
6.1.1 Covance Was the Firm Utilization Leader in 2012 104
6.2 Firm Utilization Metrics 105
6.2.1 Headcount Growth YtY 105
6.2.2 Revenue per Employee 106
6.2.3 Clinical Services Revenue per Clinical Services Employee 107
6.2.4 G&A Expense per G&A Employee 109
6.2.5 S&M Expense per S&M Employee 110
6.3 Human Capital Leadership Changes 111
6.3.1 Source Therapeutic and Regional Expertise to Boost Clinical Operations 111
6.4 Capital Management: Heat Map 113
6.4.1 EPS Was the Capital Management Leader in 2012 due to its Higher Liquidity 113
6.5 Capital Structure Metrics 114
6.5.1 Debt/Equity Ratio 114
6.5.2 Current Ratio 115
6.5.3 Cash Ratio 116
6.6 Share Offerings and Debt Restructurings 117
6.6.1 Proceeds from Share Repurchases Used to Pay-down Debt and Finance Acquisitions 117

7 Future Outlook 118
7.1 CRO Market 118
7.2 Vendor Positioning 120

8 Appendix 121
8.1 Research Methodology 121
8.1.1 Coverage 121
8.1.2 Secondary Research 121
8.2 About the Author 122
8.2.1 Adam Dion, Industry Analyst 122
8.3 Director, Healthcare Industry Dynamics 123
8.4 Global Head of Healthcare 123
8.5 About the Industry Dynamics Team 123
8.6 About GlobalData 124
8.7 Disclosure Information 124
8.8 Disclaimer 124

List of Table


Table 1: Other Strategic Partnerships, North America, 2012-2013 56
Table 2: Infrastructure Investments, North America, 2012-2013 58
Table 3: Other Strategic Partnerships, Europe, 2012-2013 66
Table 4: Infrastructure Investments, Europe, 2012-2013 69
Table 5: Other Strategic Partnerships, APAC, 2012-2013 79
Table 6: Other Strategic Partnerships, Emerging Markets, 2012-2013 93
Table 7: Infrastructure Investments, Emerging Markets, 2012-2013 97
Table 8: Recent Laboratory Accreditations and Certifications, Worldwide, 2012-2013 101
Table 9: Firm Utilization Composite Scores, 2012 104
Table 10: Key Leadership Changes, 2012-2013 111
Table 11: Capital Management Composite Scores, 2012 113
Table 12: Share Offerings and Debt Restructurings , 2012-2013 117

List of Chart


Figure 1: Contract Research Organization Deals and Deal Values ($m), 2008-2012 35
Figure 2: Number of M&A Deals and Deal Values ($m), 2008-2012 36
Figure 3: Number of Licensing Deals and Deal Values ($m), 2008-2012 37
Figure 4: Combined Peer Group Revenue ($m) by Region, 2010-2012 49
Figure 5: North America Landscape Assessment, 2012 51
Figure 6: North America Revenue ($m) by Company, 2012 60
Figure 7: North America Revenue Growth by Company, 2012 61
Figure 8: Europe Landscape Assessment, 2012 63
Figure 9: Europe Revenue ($m) by Company, 2012 71
Figure 10: Europe Revenue Growth by Company, 2012 72
Figure 11: APAC Landscape Assessment, 2012 75
Figure 12: APAC Revenue ($m) by Company, 2012 82
Figure 13: APAC Revenue Growth by Company, 2012 83
Figure 14: Emerging Markets Landscape Assessment, 2012 85
Figure 15: Emerging Markets Revenue ($m) by Company, 2012 99
Figure 16: Emerging Markets Revenue Growth by Company, 2012 100
Figure 17: Headcount Growth by Company, 2012 105
Figure 18: Revenue per Employee (In $ Thousands) by Company, 2012 107
Figure 19: Clinical Srvcs Revenue per Clinical Srvcs Employee (In $ Thousands) by Company, 2012 108
Figure 20: G&A Expense per G&A Employee (In $ Thousands) by Company, 2012 109
Figure 21: S&M Expense per S&M Employee (In $ Thousands) by Company, 2012 110
Figure 22: Debt-to-Equity Ratio by Company, 4Q12 114
Figure 23: Current Ratio by Company, 4Q12 115
Figure 24: Cash Ratio by Company, 4Q12 116
Figure 25: CRO Benchmark Peer Group, Global Market Forecast, ($bn), 2012-2017 118
Figure 26: CRO Benchmark Vendor Position and 2013 Growth Projections 120

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