In recent years Contract Research Organisations (CROs) have become the backbone of pharma and biotech research and development (R&D), the go-to source for in-depth know-how and niche expertise no longer available within such organisations. Despite being squeezed hard by COVID-19, the CRO sector has boomed. According to new analysis out by Frost and Sullivan, the global market should still grow to $63.83 billion by 2024 from $43.03 billion in 2019, at a compound annual growth rate of 8.2%.
The growth of the global CRO market has been primarily driven by increased big pharma outsourced development spend and the rapid rise in the number of venture capital-backed virtual and semi-virtual biotech companies. It has also been influenced by a shift in the industry, with more companies focusing on rare diseases with unmet medical needs. In these areas, research is lacking historically, and therefore a large R&D investment is required. Additionally, with constant scientific discoveries deepening our understanding of disease pathology, biopharmaceutical companies continue to discover, develop and commercialise novel and increasingly complex treatments.
Since 2007 the total number of drug candidates under development has almost doubled. Novel therapeutic concepts are emerging in greater and greater numbers and from new and varied sources, including universities and research institutions, and ‘spin-out’ start-up and biotech clients which are now outsourcing more stages of R&D within each programme; as part of a widely adopted outsourcing strategy.
One area of notable growth for ideas is through pharma-academia partnerships. Recent examples include AstraZeneca’s collaboration with the University of Cambridge to fund breakthrough research; GlaxoSmithKline’s 5-year partnership with the University of California to establish a state-of-the-art laboratory for CRISPR technologies, the Laboratory for Genomics Research (LGR); Boehringer’s expansion of PROTAC drugs partnership with Dundee University for targeted protein degradation research. Recently approved drugs resulting from industry-academia partnerships include Spinraza for the treatment of spinal muscular atrophy and Kymriah for the treatment of B-cell acute lymphoblastic leukaemia, both considered medical breakthroughs of recent years.
Opportunities for the UK
With advancements in areas such as personalised medicine and companion diagnostics, these therapeutic concepts and drug candidates are becoming more complex, and require the deepest level of knowledge at every R&D stage. So regardless of organisational size, for each client the benefits of working with CROs are the same: better decisions earlier, based on robust and reliable data which can enhance the chances of candidate success or result in the termination of unpromising research programmes. CROs’ ability to deliver more accurate results, in a shorter timeframe and lower costs than could be achieved in-house is imperative to clients of any size. All are facing increased complexities, higher costs and more regulatory hurdles than ever.
There is a changing view that the cost savings gained through working with cheaper overseas CROs may not be worth it when the alternative is an unparalleled drug discovery and development expertise; in which the United Kingdom is unrivalled. UK-based CRO labs are now winning back projects from overseas labs, replacing incredibly low costs, with a depth of expertise, peer-level collaborative partnerships, and trust.
Virtual and physical clusters
In the wake of big pharma closures in the UK, and the running dry of the blockbuster drug well, CROs are thriving in the science parks that have arisen Phoenix-like out of the shuttered R&D sites. Agilely responding to the changing landscape of drug discovery and development in which opportunity abounds.
“CROs are reputation and results-based businesses”, reflects Rachel Hemsley, former Head of Global Business Development’ at XenoGesis; a leading Preclinical DMPK & Bioanalysis services CRO, acquired by Sygnature Discovery in September 2020. The confidential nature of projects often prohibits CROs from publishing client lists or results; the latter impacted not only by NDAs but by the length of the projects on which their involvement is at very early stages. Instead, they are dependent on clients, partners and collaborators to speak highly of them. Because, as Hemsley, now part of the Business Development Team at Sygnature, puts it, “how do you find a plumber? You ask for recommendations.”
These referrals stem from good reputations and trusted networks, built over time. Relationships, partnerships and networks are forged through co-location within incubators and science parks and via industry associations and organisations. In these virtual and physical clusters, CROs build strong networks of highly-skilled scientists whose knowledge and expertise are valued. Each in turn validating and cross-selling each other to serve the common purpose of putting the best expertise in place to develop new medicines.
Through partnerships with industry and academic organisations like the government-funded Medicines Discovery Catapult, Hemsley posits, CROs gain validation and potential clients the assurance of a pre-approved partner in virtual clusters.
In physical clusters, the opportunities to network and collaborate are enhanced thanks to the physical proximity of co-location. Practical matters are simplified, samples can be walked across the corridor and passed to the next CRO partner, sidestepping the complexities, cost and risks of shipping and imports. Within shared spaces, CROs can meet and collaborate naturally, discuss projects and present results in person; building strong long-term working relationships.
Within these incubation spaces, CROs are provided with the room to grow without the hassle of maintaining bricks and mortar. Both space and people-intensive, sourcing grow-on space can be a significant barrier to CROs’ growth, whose sq ft requirements can be project-dependent. Instead, incubation landlords can support rather than curtail growth, responding to calls for additional space, and in some instances, building new custom-designed laboratories to support burgeoning teams.
In response to intense competition and the need to offer a comprehensive portfolio of service offerings, the CRO industry has been undergoing significant consolidation in recent years. As such, a number of significant mergers and acquisitions (M&As) have occurred.
Where regular project partnerships allow CROs to collaborate on a project-basis, M&As allow them to extend their expertise, whilst maintaining the depth. Providing something more akin to end-to-end service in which clients outsource vast chunks of the R&D work to one single provider; notably, without endangering jobs.
This, in itself, is nothing new. The mega-mergers have already happened and are serving the big pharma. IQVIA, for instance became the biggest CRO globally after acquiring numerous CROs. But recent years have seen a growing number of small to medium-sized CRO M&As, which are now servicing the growing number of small to medium-sized clients.
A fantastic example of this is Sygnature Discovery. Founded in BioCity Nottingham in 2004, Sygnature Discovery has acquired a number of CROs in the past two years, notably, many of which are co-located at BioCity locations. These include RenaSci in 2018, and Alderley Oncology and XenoGesis during 2020.
Paul Clewlow, Non-Executive Director at Sygnature mentions, “Being based at BioCity Nottingham for the past 17 years has enabled us to grow from a small, niche medicinal chemistry company into a fully-integrated drug discovery and pre-clinical CRO employing over 400 staff in Nottingham and Alderley Park. Whilst we are now able to undertake many elements of clients’ drug discovery projects its still valuable to collaborate with other nearby specialist CROs and to be part of this vibrant and growing ecosystem. Our global client bases sees our UK location as important.”
The future looks bright.
CROs are now a fundamental part of the drug discovery, and development process and their importance will undoubtedly continue to increase. As company sponsors experience growing regulatory scrutiny, escalating commercialisation costs and patent expirations on key blockbuster drugs, they are increasingly turning to outsourced expert providers to access huge repositories and pharmaceutical research know-how. To compress timelines and thereby expedite the time-to-market. In turn, the growth of CROs has accelerated over the past five years. With drivers like growth in R&D spend, increasing outsourcing penetration and the need for more complex clinical trials facilitating overall market growth – the future is looking very bright for the UK CRO industry.
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