R&D trends spur CRO business

Since 2004, Richard Lin has watched as his fledgling contract research business grew to 17 full-timers occupying 33,000 square feet of office and lab space at three San Diego-area locations. The animal-testing lab began as a two-man operation of its co-founders, sharing 1,500 square feet. 

Lin was among the early surfers to catch the CRO wave generated by biotechs whose funding was increasingly tightened, forcing them to minimize capital expenses to the point of virtualization or near-virtual status.

"We are completely self-funded," said Lin of his company Explora BioLabs in SignOn San Diego. "We generated revenue immediately."

Lin's ability to catch the CRO wave was likely due to his employment with biotech Ansata Therapeutics, for which he ran a preclinical lab. With Ansata issuing layoffs, Lin saw the writing on the wall and negotiated a deal to lease some of the lab space from the company and launch his business.

His biotech perception was shared by many, accounting for large CRO growth and increasing specialization that continues today. Frost & Sullivan figures show CROs capturing 21% of drug R&D spending worldwide, rising from 17% in 2007. CRO revenue growth in the U.S. stands at a respectable average annual rate of 9.75% over the last 5 years, reaching $11.4 billion in 2010. The market forecaster projects a near doubling by 2017 to $20.1 billion.

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