The rest of Wall Street (except biotech) may be suffering, but according to the Motley Fool, CRO stock is hot. Big Pharma and small biotech's outsourcing initiatives have been good news for CROs. Covance, Parexel, ICON, Charles River and WuXi PharmaTech have sustained impressive growth over the past year. These companies offer a range of services, from getting a new trial off the ground to dealing with Phase IV studies, but they all have one thing in common: pharma companies need to cut costs, and they can do so by outsourcing some or all of their R&D efforts to CROs.
And there's more good news. The Motley Fool says the CRO craze isn't just a flash in the pan phenomenon. "It doesn't look like the growth that CROs have experienced over the last few years is likely to go away any time soon... A recent report by Turner Investment Partners estimates that in the next few years CROs will be involved in half of all drugs at some point during development." And as with biotech stocks, CROs are insulated from the ups and downs of the market because drug development continues no matter what. Another bonus? Unlike biotechs, CROs make money whether or not the drug they're working on succeeds.
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