CROs jump into 2012 with big contracting momentum

Over the past few years the clinical research organization side of the industry has been undergoing a steady shakeout of small players as the big CROs lined up long-term deals with drug developers. Morningstar believes that the momentum will extend throughout 2012, as big CROs like Quintiles, PPD and Covance continue to rack up new strategic partnerships. And look for some fast-growing midrange players like INC to step up and compete for the business.

"We expect growth in the CRO industry to continue accelerating into 2012 and the rise of the strategic partnership model should concentrate these benefits in the hands of a select group of narrow-moat providers," wrote Lauren Migliore, a Morningstar analyst.

Morningstar calculated that the public CROs it follows increased annual revenue 11% last year. Spikes in revenue during the second and third quarters fueled a big change for the industry, offering the first hard signs of a turnaround for CROs since the financial crisis hit in 2008.

The one laggard in the group has been Charles River, notes Morningstar. The CRO did boost its top line results, said Migliore, but that was largely the result of foreign currency transactions rather than a fundamental improvement in the business.

- read the report from Morningstar
- here's the story from MedCity News