As Pharma Cuts Back, CROs Do More

As Pharma Cuts Back, CROs Do More

Mark Crawford

Reacting to market and regulatory forces, pharmaceutical science continues to adapt and survive.Years of downsizing and reduced R&D budgets, combined with the “patent cliff” that many large pharmaceutical companies are facing, have resulted in tens of thousands of layoffs, flooding the job market and creating aftershocks felt throughout the industry. Regulatory changes are also hitting hard. New FDA requirements, especially those focusing on long-term studies, have lengthened internal development timelines and increased costs. The overall effects of these changes are reduced drug applications and less innovation, with fewer products in the pipeline.

Both big pharma and small pharma have responded to these challenges with leaner operations. Faced with cash-flow and pipeline problems, big pharma is turning over more drug development to small companies and contract research organizations (CROs). This has created more space for small pharma and CROs to shine. One reason small pharma has been so productive is the entrepreneurial culture it supports; these companies have also developed strong, symbiotic partnerships with like-minded CROs that are lean, quick, and efficient.

Because small pharma wants to stay lean and focused on development, they generally lack the infrastructure necessary to support all elements of the development process, which may start as early as the preformulation phase—which is why they turn to CROs.

“CROs are becoming fully equipped development organizations that are able to supply the necessary technical capabilities and infrastructure required to help small pharma progress their medicines through the development cycle from proof-of-concept through commercial registration,” says David Igo,director for Catalent Pharma Solutions in Raleigh-Durham, North Carolina.

To add more value to their relationships, contract organizations are elevating the level of science available to their customers. “Innovative CROs are now bringing a much higher quality of pharmaceutical science to the table,” comments James Bernstein, owner of Live Oak Pharmaceutical Consulting Inc. in Raleigh, North Carolina.  “One example is Catalent’s acquisition of a solid-state screening and characterization group from GSK. Another example is Aptuit’s acquisition of SSCI several years ago.”

Innovation in the pharmaceutical industry today consists mostly of finding new ways to work more efficiently, use fewer resources, and remove the peaks and valleys of the development cycle—something that is easier to do at the CRO scale.

CROs will likely have key roles in developing generic products and biosimilar drugs, tightening the supply chain, and the expanding globalization of R&D—all major trends in the coming years.

Mark J. Ginski,vice president of product development and operations for Cerecor in Baltimore, Maryland, believes the best big pharma companies will be those that invest in partnerships with small companies and can accurately predict which small pharma products have the best market potential.

“Small pharma companies led by serial entrepreneurs with a history of past success will garner the most attention from big pharma,” adds Ginski. “Successful consultants and CROs are set to gain the most because there is a lot of work to be done and money to be made, given small pharma’s preference to contract out projects.”

That said, U.S. CROs will also face tough international competition. The best bids—quality of site, capability reporting, analytical methods, processing, and pricing—tend to come from Chinese CROs with business development and key functions in the U.S. Therefore American CROs must stay lean and deliver higher quality than their offshore counterparts to stay competitive in the global marketplace.

This article is repurposed with permission from “The Evolution of Pharma” by Mark Crawford, which was originally published in the June 2012 issue of AAPS Newsmagazine, copyright © 2012 American Association of Pharmaceutical Scientists (

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