2016 CRO MARKET SIZE PROJECTIONS 2015-2020 - C R O MARKET SIZE - Industry ...
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CRO
MARKET SIZE
2 0 1 6
P R E V I E W O F
2016 CRO MARKET
SIZE PROJECTIONS
2015-2020
J A N U A R Y, 2 0 1 6Introduction
SMARTER QUESTIONS SMARTER ANSWERS
REPORT OVERVIEW
The past three years have been ISR’s report gives quantitative
quite eventful in the CRO world. insight into the perpetual
We’ve had service provider question: “What is the size of the
mergers and we’ve had service CRO market?” The data provide
provider mega-mergers. We’ve a thorough, rational perspective THIS
for clinical development services
had biopharma mergers and
we’ve had biopharma mega-
segmented by phase, geography, PREVIEW
and service line.
mergers. We’ve had public INCLUDES
offerings and we’ve had
privatizations. Overall, the CRO
ISR utilizes both publicly available
information and data obtained
SAMPLE
market has been one of the
best performing sectors in the
through our syndicated primary
market research efforts.
PAGES FROM
financial circles.
THE REPORT
24 2016
Publication Date
25
Charts and Graphs Pages
What you will learn
• Estimated R&D expenditures through 2020
• Projected spending through 2020 segmented by source (sponsor type) and by:
• Development
• Phase I-IV Development WHY ISR?
• Outsourced Phase I-IV Development 1. ISR has leveraged data
from our primary market
• 2016 Geographic Distribution of CRO Market Size
research. These data,
• 2016 Service-line Assessment of CRO Market Size
coupled with the “acts and
• 2016 Phase I-IV Assessment of CRO Market Size figures” from secondary
sources, allow for
intelligent projections into
the CRO market size.
Report Structure
2. The use of primary
1. Executive Summary 3. 2016 Geographic Assessment research data gives ISR
2. Overall Market Size and Growth 4. 2016 Service-line Assessment the unique ability to break
• Top-down approach to market size 5. 2016 Development Phase I-IV down the outsourced
• R&D sources and distribution Assessment market further than
• Model adjustments – From R&D to 6. 2015-2020 CRO Market Model ever before, by offering
CRO market size geographic, service
• Development spending 7. 2015-2020 CRO Market Model –
Growth Rates line, and Phase I-IV
• Phase I-IV development spending
• Outsourced Phase I-IV development assessments.
8. 2014 Public CRO Market Share
spending
• 2016 full model analysisIntroduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
TABLE OF CONTENTS
COPYRIGHT AND USAGE GUIDELINES
METHODOLOGY
EXECUTIVE SUMMARY
INTRODUCTION
OVERALL MARKET SIZE AND GROWTH
Top-down approach to market size
R&D sources and distribution
Table 1: R&D expenditures by segment (2015-2020)
Model adjustments – From R&D to CRO market size
Development spending
Table 2: Development as a percent of R&D by segment (2015)
Table 3: Development expenditures by segment (2015-2020)
Phase I-IV development spending
Table 4: Ph I-IV development as a percent of development by segment (2016)
Table 5: Ph I-IV development expenditures by segment (2015-2020)
Outsourced Phase I-IV development spending
Table 6: Outsourced Ph I-IV development as a percent of development by segment (2015-
2020)
Table 7: Outsourced Ph I-IV development expenditures by segment (2015-2020)
2016 full model analysis
2016 GEOGRAPHIC ASSESSMENT
Table 8: 2016 geographic distribution (%) of the CRO market size
Table 9: 2016 geographic distribution ($B) of the CRO market size
2016 SERVICE-LINE ASSESSMENT
Table 10: 2016 service-line distribution (%) of the CRO market size
Table 11: 2016 service-line distribution ($B) of the CRO market size
2016 DEVELOPMENT PHASE I-IV ASSESSMENT
Table 12: 2016 development phase distribution (%) of the CRO market size
Table 13: 2016 development phase distribution ($B) of the CRO market size
2015-2020 CRO MARKET MODEL
2015-2020 CRO market model – growth rates
2014 PUBLIC CRO MARKET SHARE
Table 14: 2014 public CRO market shares
ABOUT INDUSTRY STANDARD RESEARCHIntroduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
S A M P L E P A G E :
INTRODUCTION
SMARTER QUESTONS SMARTER ANSWERS
INTRODUCTION
Welcome to the third edition of ISR’s CRO per year� However, in 2014 and 2015 the total
Market Size report� The past three years have investments rose to $6�3B and $7�4B, respectfully�
been quite eventful in the CRO world� We’ve had When you do the math, not only has the absolute
service provider mergers and we’ve had service value of the investments increased, but so too has
provider mega-mergers� We’ve had biopharma the average value per deal (rising from an average
mergers and we’ve had biopharma mega- of $9�0M from 2010-2013 to $14�4M in 2014-
mergers� We’ve had public offerings and we’ve 2015) – all of which we think point to strength in
had privatizations� Overall, the CRO market has the funding market�
been one of the best performing sectors in the
financial circles� In fact, over the past 12 months As a result of increasing our R&D growth
the Dow Jones Industrial Average is down 10%, assumptions, readers of past CRO Market
while PRA Health is up 78%, INC Research is up Size reports will notice a slight-moderate
64%, ICON is up 19%, Quintiles is up 6%, and increase in the CRO market� That said, we will
Parexel is up 2%� Yes, all the CROs have an “up” reiterate what we mentioned in the previous
before their percentage� report: The major lever in CRO revenue is still
the outsourcing propensity/penetration� One
Why all the good news for CROs? As we have market dynamic we have not accounted for is
noted in the past, and in this current forecast, the the impact of biopharma mega-mergers� We
market for their services is increasing� Sponsors have not modeled this because we don’t think
continue to outsource more of their clinical there is a lasting macro impact of these mergers�
development work across a broad range of However, we do think those mergers can and
services to service providers of all sizes� That said, will have a significant impact on the CROs that
for the past few reports on this topic we have are involved with those sponsor companies�
been somewhat pessimistic on the long-range Another impact readers will note is in the CRO
overall R&D spending by biopharmaceutical market share section� With an increased CRO
companies� In our 2015 CRO Market Size report, market, some of the public CROs will notice a
we projected that R&D spending on small slight drop in their market share� Given that most
molecule would decrease by a CAGR of 1% over of the changes in our R&D model impacted
the forecast period� Given the overall strength the small sponsor segment, we think this aligns
of the VC market continuing to invest in small nicely with the public CROs’ traditional customer
biopharma companies and given large pharma’s set (of large sponsors)�
propensity to continue to acquire assets or
companies to strengthen their pipelines, we have In our view, the pace of change in the CRO
revisited our R&D assumptions� For the 2015- market will not slow down anytime soon� Look
2020 forecast we have increased both the small for more mergers as providers continue to scale
molecule and large molecule R&D figures to up global capabilities and fill in their service
account for the influx in VC-based investment offerings; look for more sophisticated marketing
going mostly to smaller sponsor organizations� and branding efforts as the battle for market
According to PricewaterhouseCoopers (PWC), share increases; and perhaps look for “non-
since 2010 the average number of VC deals in traditional” CRO service providers to enter the
the biopharma space is ~490 per year and this market via partnerships or outright acquisitions�
has not fluctuated much over the past five years� We would also not be surprised to see interest
From 2010 through 2013, the average annual gaining momentum for a CRO-CMO merger�
investments have totaled approximately $4�4B
www.ISRreports.com ©2016 2016 Edition of the CRO Market Size Projections: 2015-2020 5Introduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
S A M P L E P A G E :
SMARTER QUESTONS SMARTER ANSWERS
R&D SOURCES
AND
R&D sources and distribution
DISTRIBUTION As previously stated, ISR starts our market model by gathering the R&D spending from the major
sources of R&D activity� In the following steps that refine our market size estimates, these figures will
be adjusted to account for varying degrees of spending directly associated with CRO revenue�
ISR starts our market model by
gathering the R&D spending from
P R O J EC T E D 20 1 6 TOTA L R & D B R E A K D OWN ( $B )
the major sources of R&D activity.
Academic $41.4
This page shows the projected 15% Pharma $94.9
35%
total R&D breakdown for 2016. Association $5.6
2%
Private $4.3
2% © Industry Standard Research
Government $68.8
25%
Biotech $41.4
15%
Generic/Specialty $15.0
6%
Table 1: R&D expenditures by segment (2015-2020)
$B USD 2015 2016 2017 2018 2019 2020
Large pharma $67�0 $67�4 $68�1 $67�4 $68�1 $70�0
Small pharma $27�2 $27�4 $27�7 $27�6 $27�9 $28�7
Large biotech $27�9 $29�4 $31�1 $32�9 $34�7 $35�7
SMARTER QUESTONS SMARTERSmall
ANSWERS
biotech $11�3 $12�0 $12�7 $13�4 $14�2 $14�6
Generic/Specialty $14�5 $15�0 $15�5 $16�0 $16�4 $16�8
Government $65�1 $68�8 $72�6 $76�7 $81�0 $81�0
Private $4�3 $4�3 $4�3 $4�3 $4�3 $4�3
Association/Non-profit $5�4 $5�6 $5�8 $6�0 $6�2 $6�3
Academic $40�1 $41�4 $42�8 $44�0 $45�5 $46�3
Total $262�9 $271�3 $280�5 $288�3 $298�2 $303�7
© Industry Standard Research
R&D sources and distribution www.ISRreports.com ©2016 2016 Edition of the CRO Market Size Projections: 2015-2020 9
As previously stated, ISR starts our market model by gathering the R&D spending from the major
sources of R&D activity� In the following steps that refine our market size estimates, these figures will
be adjusted to account for varying degrees of spending directly associated with CRO revenue�
C L O S E R L O O K
P RO J ECTED 20 16 TOTAL R & D BR EA K D OWN ( $ B)
>>This chart shows
Academic $41.4 the sources of R&D
15% Pharma $94.9
35% spending for 2016.
Association $5.6 Pharma and Biotech
2%
account for 50% of R&D
Private $4.3 spending.
2% © Industry Standard Research
Government $68.8
25%
Biotech $41.4
15%
Generic/Specialty $15.0
6%
Table 1: R&D expenditures by segment (2015-2020)Introduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
S A M P L E P A G E :
MODEL ADJUSTMENT
This page highlights ISR’s top-down approach to our market sizing calculations. The
full analysis and figures for the 2016 Outsourcing Phase I-IV Development Market are
available in the full report at www.ISRreports.com.
SMARTER QUESTONS SMARTER ANSWERS
Model adjustments – From R&D to CRO market size
As previously stated, ISR utilizes a top-down approach to our market sizing calculations, starting
with R&D spending� We then use a series of “deflators” in order to narrow the market applicable to
pharmaceutical service providers� The steps taken for these calculations are outlined below�
R&D expenditures are first analyzed to remove the “R” (research) and we are left with “D”
(development) spending per segment�
Development spending is then analyzed by the amount of spending done for Phase I-IV clinical
studies�
Phase I-IV clinical development spending is then segmented by the outsourcing penetration of each
company size/ organization type to arrive at the market size for CROs�
2016 R&D:
$271.3B
2016 Development:
$110.6B
2016 Phase I-IV
Development:
$78.8B
2016 Outsourcing Phase I-IV
Development Market:
$29.8B
© Industry Standard Research
www.ISRreports.com ©2016 2016 Edition of the CRO Market Size Projections: 2015-2020 10Introduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
S A M P L E P A G E :
2016 SERVICE-LINE ASSESSMENT
ISR provides an assessment of the CRO market based on the services CROs typically
offer, based on ISR’s proprietary survey data.
The following chart has been blinded. The full data are available in the report, which can be
downloaded from www.ISRreports.com.
SMARTER QUESTONS SMARTER ANSWERS
2016 SERVICE-LINE
ASSESSMENT
Based on ISR’s proprietary survey data, we provide an assessment of the CRO market based on the
services CROs typically offer� We certainly understand that the distribution of service costs varies by
study type, phase, compound, etc� However, on aggregate, we believe our data provide one of the
most accurate representations of the CRO market size based on services in the industry�
We use the same data and assumptions with respect to our model working down from R&D to
development to Phase I-IV development activities to outsourcing propensity when working on our
service-line splits�
Table 10: 2016 service-line distribution (%) of the CRO market size
2016
Clinical Monitoring 21�7%
2016
ClinicalPayments
Investigator Monitoring 13�1% XX%
Data Management 11�3%
Investigator
Laboratory Payments 10�5% XX%
DataManagement
Project Management 9�0% XX%
Patient and site recruitment 8�5%
Laboratory
Technology 6�9% XX%
Biostatistics
Project Management 6�4% XX%
Medical Writing 3�4%
Patient
Regulatory and site recruitment
2�8% XX%
Imaging 2�7%
Technology XX%
Quality Assurance 2�4%
Biostatistics
Other 1�3% XX%
Total 100%
Medical Writing XX%
Regulatory XX%
Imaging XX%
Quality Assurance XX%
Other XX%
Total 100%
www.ISRreports.com ©2016 2016 Edition of the CRO Market Size Projections: 2015-2020 19Introduction
2016 CRO MARKET SIZE PROJECTIONS 2015-2020
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