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CRO Insights: Turbulent Times

August 10, 2009 23:27 by asischemadmin
This is a turbulent time for most CROs. As many existing or prospective customers are merging or going out of business, many companies are finding it difficult to grow or even maintain revenues. Moreover, CROs are now investing more money as a percentage of revenue into business development activities, in an effort to boost business - that puts more pressure on short term profitability. Here are a few highlights from the industry:

1. AMRI invests in European R&D in Hungary, and sees revenue growth in discovery mostly due to the new Singapore site where it dominates chemistry outsourcing for Singapore's rapidly growing life sciences industry.
2. Covance experiencing decline in preclinical demand, in line with many R&D programs being frozen during the first part of the year.
3. deCODE sheds medicinal chemistry and structural biology units, unable to compete in a fragmented and crowded marketplace with many low-cost players.

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CROs Are Hurting, But Better Times Are Ahead

May 6, 2009 23:29 by asischemadmin
CROs are hurting in 2009, largely due to softening demand from cash strapped biotechs that have halted discovery in favor of later stage clinical programs. Charles River's pre-clinical business is off 17% in Q1 2009 compared to same period last year. The good news for pre-clinical CROs is that these programs will get funded and restarted at some point. Money is already gathered by those that recognize a unique opportunity to buy into research programs at highly depressed valuations, as evidenced here, here, here and here. Companies whose programs get funded will likely outsource a lot of work rather then rehire those that were previously laid off, and those CROs that are still around will be overwhelmed with demand. Given the trend towards vertical integration, CROs that can offer complimentary services as part of a single agreement will likely have a competitive edge over their niche rivals.

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