Competition within Pharma-Biotech Industry Drives Demand for CROs

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Researched by Industrial Info Resources (Sugar Land, Texas). As pharmaceutical companies strive to be one step ahead of the competition with researching and developing new treatments and medicines, more and more companies within the industry are opting to outsource resources for maximum results. Although many pharmaceutical companies will continue to provide research capabilities within their organization, others are choosing to exercise the use of Contract Research Organizations (CROs).

There are several benefits provided by CROs that contribute to their popularity within the industry. Due to continued market competition causing revenue growth to be compromised along with the pressure pharmaceutical companies are feeling to control rising drug development costs, outsourcing to CROs can help keep these issues under control. Some companies may also see these organizations as more economically viable due to the fact that companies can save on employee costs and salaries because a new staff is not required to be hired for each research project. Thirdly, a lower margin of error rate in research studies being duplicated can be comforting to businesses knowing that only one professional is in charge monitoring all the studies being researched.

Over a five-year span (2004-2008) Industrial info Resources has tracked over $238 million in CRO-related expansion spending (Reference: (PECWeb Direct). Among those currently expanding are IBT Laboratories (Lenexa, Kansas), set to invest $2 million into a project to expand its 30,000 square-foot CRO facility with construction starting by the end of the year. Immunology testing and other services will be increased by the addition of new laboratory equipment and analytical systems. Covance Laboratories (NYSE:CVD ) (Princeton, New Jersey) is investing $72 million to expand a contract research pharmaceutical testing lab in Madison, Wisconsin, which is scheduled to be complete by the end of this year. A company based out of Everett, Washington is really taking advantage of the future growth potential of CROs with two projects currently underway. SNBL USA, Limited (Everett, Washington), a pre-clinical small animal CRO, is currently spending $35 million on a new research facility in San Antonio, Texas, and investing a similar amount with an expansion of its Everett, Washington location to double lab space to over 200,000 square feet.

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