Drug Discovery CRO Sector to Thrive in Europe

The European pharmaceutical industry is changing its approach to R&D and is increasingly relying on outsourcing for drug discovery, writes Faiz Kermani.

The European pharmaceutical industry accounts for nearly 40% of the global industry’s R&D investment. Although  companies are responding to current pressures by closing R&D sites, they still need to support their ongoing drug-development projects to maintain productivity. Consequently, there is increasing reliance on the CRO sector to provide the necessary expertise. As a result, the value of the outsourcing market is growing rapidly. Recently, it was predicted that the value of the global drug-discovery outsourcing market would reach $14.9 billion in 2014 . An alternative estimate puts the value of the global drug-discovery outsourcing market at nearly $25 billion by 2018.

Despite the difficult global economy, the drug-discovery CRO sector is expected to prosper. Over the next five years, it is predicted that close to half of the global drug-discovery research in the pharmaceutical industry will likely be carried out by third parties, such as CROs. It is, therefore, not surprising that new CROs are entering the market to deal with the increasing demand for drug-discovery services. Many are highly specialised in new, innovative technologies that the pharmaceutical industry has previously been hesitant to invest in or has been unsuccessful in capitalizing upon.

Better collaboration
In February 2014, UK Trade & Investment (UKTI) held two events in Switzerland entitled “Early stage drug discovery partnering with CROs from the UK” to highlight the available collaboration opportunities with UK companies in innovative drug discovery.

The UKTI events were held in Basel and Geneva to involve all types of drug-development organizations operating in Switzerland, ranging from the major multinationals to small start-ups and non-profit organizations. Representatives from five British CROs, (Aurelia Bioscience, Charnwood Molecular, XenoGesis, Reach Separations and Source Bioscience) - all based in Nottingham at BioCity, one of the UK’s leading bioscience incubators - gave presentations on their companies’ offerings and then participated in a roundtable discussion on the future of outsourcing for drug discovery. As highlighted by UKTI, these companies represented the diversity and dynamism existing within the UK’s life-sciences sector.

It is now widely accepted that the rising complexity of pharmaceutical R&D and its associated expense means that it is no longer possible for one organization to cover all the necessary tasks for drug discovery in-house. Therefore, collaboration between multiple parties, particularly with CROs, has become an accepted option. Large pharmaceutical companies have outsourced many of their activities to CROs to better control their costs and manage resources, but also in the hope of finding innovative solutions to the research problems that they have been unable to resolve in-house. For smaller drug-development companies, outsourcing allows them a means to access specialist expertise that they do not possess and would be too expensive to maintain permanently in-house.

Outlook
As noted by presenters at the UKTI events, while many CROs were considered only as one-off service providers in the past, with cost being the deciding factor, today’s collaborations with the pharma industry are increasingly taking the form of partnerships. In many cases, CROs have established long-term relationships with their clients. This has meant that the practical lessons from one drug-discovery project can be applied to others, thereby, improving communication and facilitating innovation for the product pipeline. The shift towards greater partnerships between the two sets of parties has been helped by the fact that many personnel in the CRO sector previously worked in the pharmaceutical industry.

The UKTI events highlighted how the international pharmaceutical industry is changing its approach to R&D and increasingly relying on outsourcing for drug discovery. Given their historic strengths in drug discovery and continuing investment in this field, the UK and Switzerland are ideal partners for future collaborations in discovering and developing new medicines.