By Tom Schramski, PhD, CM&AA and Glenn Lippman, MD, DLFAPA
Volume 3 Issue 3, February 2, 2016
At a recent meeting we were discussing a life science company that was affiliated with a CRO when one participant asked, “What’s a CRO?” It’s not an uncommon question despite the fact that CROs have become a significant force in today’s healthcare marketplace.
Contract Research Organizations (CROs) are entities that provide outsourced research services to pharmaceutical, biotechnology, and medical device companies in both the private and public sectors. Typical offerings include biopharmacology/assay development, preclinical and clinical research, clinical trials, and other related services. Revenue for the more than 1,200 international CROs in existence was more than $25 billion in 2015, with at least 10% annual growth predicted by ISReports for the next decade.
Although the CRO market is fragmented, 10 companies command just over a 50% share and are working to increase their consolidation through innovation and acquisition.
CROs demonstrate how disruption can create a positive market in a classic manner, offering increased accessibility and affordability to customers, who are often small pharmaceutical companies, venture capital-backed start-ups, and other biotechnology businesses. Here’s how they do it:
To see how far this has already evolved, there are now companies devoted to CRO staffing! That’s right. There are now entities that provide a la carte staffing services for CROs, which are themselves a la carte in strategy.
CRO’s impact for healthcare is significant. They offer start-ups and institutional pharmaceutical and biotechnology companies the flexibility - and support - they need to bring new products to the marketplace. They are evidence of the value of disruptive innovation in our marketplace. The winners (leaders and customers) will be those who embrace them with an optimistic spirit.
Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.