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Development of Domestic and Foreign CRO Companies



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The Contract Research Organizations ?CRO? characterized by high professional requirements have become an important component in Chinese Medicine R&D area. How to strengthen the competitive advantage of China CRO Companies in China to promote the development of pharmaceutical industry has been an urgent issue. In this paper, three types of CRO service in China including the preclinical CRO, the clinical CRO, and the one -stop CRO are investigated. This paper performs case studies, analyzes the professional competitive advantage, and provides policy recommendations and suggestions, which might offer reference for the promotion of the CRO competitiveness and the development of related policies in China.

Since the first Contract Research Organization (CRO) emerged in the US in 1980's, the market of CRO has experienced a rapid growth. Indeed, the annual revenue keeps growing at a rate of 14%?16%, reaching to $20 billion in 2010, which represents almost one third of the total R&D expenditure from pharmaceutical and biotech companies. In 2013, the figure will rocket to

$35 billion. Nearly 88% of the market is under the control of nearly 500 CROs from developed countries. Emerging countries such as China and India account for only 1%and 3% of the total market respectively, though, China and India, along with other 5 countries will be the most promising markets in the future, according to the report conducted by IMS. The fact is more and more international CROs have their presence in emerging countries and take emerging countries into strategic consideration.

At the firm level, USA CROs are capable of providing one stop full services from discovery to later manufacturing and approval of affairs to pharmaceutical companies. At early stages of their development, they prefer to internationalize instead of only concentrating on home market.

Europe and Japan are the preferential markets to be entered. By means of green field investment, acquisition and alliance, they expand their capacity and broaden their business scope. In recent years, they start to put emerging markets on agenda strategically. With continuous investment in sophisticated technology and global integration, USA CROs stand at the leading position in the globe. However Chinese and Indian CROs are more often specialized in one or several specific

Segments of the value curve. Most of them enter the market by providing regulatory consulting

services  or simple subject recruitment services in clinical trials without technology and skill

requirements. Although some companies directly start business in early drug discovery due to

strong capability in chemistry, in general, they are not able to confront and challenge advanced

China CRO companies at present. Moreover, they do not internationalize as aggressively as advanced CROs do.Nevertheless, there is evidence indicating that they are gradually augmenting and strengtheningtheir capabilities organically, and some of them are on the way to adopt radical growth approach.


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