preview of 2017 cro market size projections 2016-2021gate250.com/dmiller/isr reports - 2017 edition...

2017 CRO MARKET SIZE PROJECTIONS2016-2021M A R C H , 2 0 1 7

P R E V I E W O F

REPORT OVERVIEW

What you will learn

The past three years have been quite eventful in the CRO world. We’ve had service provider mergers and we’ve had service provider mega-mergers. We’ve had biopharma mergers and we’ve had biopharma mega-mergers. We’ve had public offerings and we’ve had privatizations. Overall, the CRO market has been one of the best performing sectors in the financial circles.

ISR’s report gives quantitative insight into the perpetual question: “What is the size of the CRO market?” The data provide a thorough, rational perspective for clinical development services segmented by phase, geography, and service line.

ISR utilizes both publicly available information and data obtained through our syndicated primary market research efforts.

25 PAGES

24

CHARTS & GRAPHS

Introduction

SMARTER QUESTIONS SMARTER ANSWERS

WHY ISR?1. ISR has leveraged data from our primary market research. These data, coupled with the “facts and figures” from secondary sources, allow for intelligent projections into the CRO market size.

2. The use of primary research data gives ISR the unique ability to break down the outsourced market further than ever before, by offering geographic, service line, and Phase I-IV assessments.

Publication Date: March, 2017

• Estimated R&D expenditures through 2021

• Projected spending on development, Phase I-IV development, and outsourced Phase I-IV development through 2021, segmented by sponsor type:

• Large pharma – large molecule

• Large pharma – small molecule

• Non-large pharma – large molecule

• Non-large pharma – small molecule

• Generic/Specialty

• Government

• Private

• Association/Non-profit

• Academic

• Spending on CRO services segmented by:

• Geography

• Service-line

• Phase I-IV

Introduction

2016 CRO MARKET SIZE PROJECTIONS 2015-2020

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 (2016-2021)

Model adjustments – From R&D to CRO market size

Development spending

Table 2: Development as a percent of R&D by segment (2017)

Table 3: Development expenditures by segment (2016-2021)

Phase I-IV development spending

Table 4: Ph I-IV development as a percent of development by segment (2017)

Table 5: Ph I-IV development expenditures by segment (2016-2021)

Outsourced Phase I-IV development spending

Table 6: Outsourced Ph I-IV development as a percent of development by segment (2016-2021)

Table 7: Outsourced Ph I-IV development expenditures by segment (2016-2021)

2017 full model analysis

2017 GEOGRAPHIC ASSESSMENT

Table 8: 2017 geographic distribution (%) of the CRO market size

Table 9: 2017 geographic distribution ($B) of the CRO market size

2017 SERVICE-LINE ASSESSMENT

Table 10: 2017 service-line distribution (%) of the CRO market size

Table 11: 2017 service-line distribution ($B) of the CRO market size

2017 DEVELOPMENT PHASE I-IV ASSESSMENT

Table 12: 2017 development phase distribution (%) of the CRO market size

Table 13: 2017 development phase distribution ($B) of the CRO market size

2016-2021 CRO MARKET MODEL

2016-2021 CRO market model – growth rates

2016 PUBLIC CRO MARKET SHARE

Table 14: 2016 Public CRO market shares

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TABLE OF CONTENTS

Questions about this report? Contact us

Introduction


SMARTER QUESTONS SMARTER ANSWERS

2017 Edition of the CRO Market Size Projections: 2016-2021 5www.ISRreports.com ©2017

INTRODUCTION2016 was probably the year “CRO” finally became a household name on Wall Street and in the halls of private equity firms� That said, those of us who have been in the industry for a while witnessed just another year of solid growth and exchanges of ownership� Make no mistake, more and more people are watching the CRO space� Let’s recap:

• Bioclinica was busy buying Clinverse, Cinven, and Compass Research

• Covance names industry veteran, John Ratliff, as its CEO

• ICON purchases Clinical Research Management

• INC Research focuses new service offerings on sites and patients

• inVentiv Health Clinical files their S-1, opening the door to going public

• Medpace goes public (market capitalization of ~$1�5B)

• PAREXEL closes on several bolt-on acquisitions (e�g� Health Advances, ExecuPharm, and The Medical Affairs Company in early 2017)

• PPD buys Evidera and Synexus and is rumored to be a potential take-over candidate for LabCorp/Covance

• PRA Health Sciences stock was up ~22% in 2016

• Premier Research receives a growth investment from Metalmark Capital

• Quintiles and IMS merge (market capitalization north of $18B) and buys TKL Research

• SynteractHCR was acquired by Amulet Capital Partners

We think there are several reasons why it might not be too late to jump on the CRO bandwagon� Let’s start with first principals, demand� In the United States and Western Europe, the two largest pharmaceutical markets, the population is aging and the demand for pharmaceutical products is increasing� Therefore it is not surprising that, according to various estimates, underlying global R&D expense (read: potential CRO revenue) continues to grow� This helps form a solid foundation from which to build a growing business� If your demand has a relatively consistent 2-4% annual growth rate, then just keeping your market share constant will result in increased revenue� Pharmapro-jects also has some good news for the CRO industry� According to its projections, the preclinical pipeline increased from ~6,000 candidates in 2015 to ~6,800 candidates in 2016 (a healthy 13% in-crease in one year)� This increasing preclinical pipeline should provide a solid base for clinical stud-ies over the coming years� ISR projects that outsourcing rates will continue to increase at a modest rate for the next few years� With these fundamentals in place, CROs should see solid topline growth over the next few years� That said, this is far from certain�

This is an enterprise-wide license and this file is not to be distributed beyond the terms of this agreement. For information on the license holder, please contact ISR ([email protected]).

S A M P L E P A G E :

INTRODUCTION


Introduction



9 2017 Edition of the CRO Market Size Projections: 2016-2021www.ISRreports.com ©2017

R&D sources and distributionAs previously stated, ISR starts its 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�


© Industry Standard Research

Small molecule $98.734%

Large molecule $51.518%

Academic $44.815%

Association $6.12%

Private $4.31%

Government $72.625%

Generic/Specialty $15.55%

PROJECTED 2017 TOTAL R&D BREAKDOWN ($B)


$B USD 2016 2017 2018 2019 2020 2021

Large company, small molecule

$69�5 $68�6 $68�3 $66�5 $64�9 $64�3

Non-large company, small molecule

$30�4 $30�1 $30�0 $29�3 $28�7 $28�5

Large company, large molecule

$31�8 $35�8 $38�8 $42�9 $47�3 $50�8

Non-large company, large molecule

$13�9 $15�7 $17�1 $18�9 $20�9 $22�5

Generic/Specialty $15�0 $15�5 $16�0 $16�4 $16�8 $17�1

Government $68�8 $72�6 $76�7 $78�9 $81�0 $81�7

Private $4�3 $4�3 $4�3 $4�3 $4�3 $4�3

Association/Non-profit $5�8 $6�1 $6�3 $6�4 $6�6 $6�7

Academic $43�1 $44�8 $46�3 $47�4 $48�7 $49�9

Total $282�7 $293�4 $303�7 $311�1 $319�1 $325�6



R&D SOURCES AND DISTRIBUTIONISR starts our market model by gathering the R&D spending from the major sources of R&D activity. This page shows the projected total R&D breakdown for 2017.

C L O S E R L O O K

>>This chart shows the sources of R&D spending for 2017. Small molecule and Large molecule account for 52% of R&D spending.

Data available in the full report. Click here to purchase from ISRreports.com



R&D sources and distributionAs previously stated, ISR starts its 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�



Small molecule $98.734%

Large molecule $51.518%

Academic $44.815%

Association $6.12%

Private $4.31%

Government $72.625%

Generic/Specialty $15.55%

PROJECTED 2017 TOTAL R&D BREAKDOWN ($B)


$B USD 2016 2017 2018 2019 2020 2021

Large company, small molecule

$69�5 $68�6 $68�3 $66�5 $64�9 $64�3

Non-large company, small molecule

$30�4 $30�1 $30�0 $29�3 $28�7 $28�5

Large company, large molecule

$31�8 $35�8 $38�8 $42�9 $47�3 $50�8

Non-large company, large molecule

$13�9 $15�7 $17�1 $18�9 $20�9 $22�5

Generic/Specialty $15�0 $15�5 $16�0 $16�4 $16�8 $17�1

Government $68�8 $72�6 $76�7 $78�9 $81�0 $81�7

Private $4�3 $4�3 $4�3 $4�3 $4�3 $4�3

Association/Non-profit $5�8 $6�1 $6�3 $6�4 $6�6 $6�7

Academic $43�1 $44�8 $46�3 $47�4 $48�7 $49�9

Total $282�7 $293�4 $303�7 $311�1 $319�1 $325�6



Introduction




Model adjustments – From R&D to CRO market sizeAs previously stated, ISR utilizes a top-down approach to 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�

2017 Phase I-IV Development:

$85.9B

2017 R&D: $293.4B

2017 Development: $120.7B

2017 Outsourcing Phase I-IV Development Market:

$34.3B




MODEL ADJUSTMENTThis page highlights ISR’s top-down approach to our market sizing calculations. The full analysis and figures for the 2017 Outsourcing Phase I-IV Development Market are available in the full report at www.ISRreports.com.


Introduction




2017 SERVICE-LINE ASSESSMENTBased 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: 2017 service-line distribution (%) of the CRO market size

2017

Clinical Monitoring 21�1%

Investigator Payments 13�2%

Data Management 10�9%

Laboratory 10�7%

Project Management 9�0%

Patient and Site Recruitment 8�7%

Technology 7�3%

Biostatistics 6�4%

Medical Writing 3�1%

Imaging 3�1%

Regulatory 2�8%

Quality Assurance 2�4%

Other 1�3%

Total 100%



2017 SERVICE-LINE ASSESSMENTISR 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.

2017

Clinical Monitoring XX%

Investigator Payments XX%

Data Management XX%

Laboratory XX%

Project Management XX%

Patient and Site Recruitment XX%

Technology XX%

Biostatistics XX%

Medical Writing XX%

Regulatory XX%

Imaging XX%

Quality Assurance XX%

Other XX%

Total 100%


Introduction


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BYJOB

LEVEL

Director 46%

Manager 29%

C-level 13%

VP 10%

BYEXPERIENCE

IN YEARS

16-20 years 23%

11-15 years 24%

6-10 years 11%

3-5 years 5%

20+ years 37%

BYCOMPANY

TYPE

Other 6%

Sponsor 78%

CRO 6%

ResearchSite 10%

preview of 2017 cro market size projections 2016-2021gate250.com/dmiller/isr reports - 2017 edition...

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