What do big mergers mean for small CROs?

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Monique Ellis

The last few years have seen a substantial increase in mergers and acquisitions at the top of the global contract research organisation (CRO) food chain. We’ve seen Quintiles and IMS become IQVIA, the acquisition of Chiltern by LabCorp and INC Research merge with inVentiv Health to create Syneos Health. At this high level, the mergers are bound to lead to domination of the CRO landscape, changing it beyond recognition. But what does this mean for smaller and mid-sized CROs?

Increased competition

The CRO consolidation is bound to encourage mid-sized CROs to follow in a similar direction; to seek investment and expand their reach. As the giant CROs grow and complement their existing capabilities, there will certainly be greater competition for the top 10 spots on the CRO hot list.

The merger trend is not over and lots of mid-sized and small CROs may be absorbed by leading service providers in the near future, perhaps even by non-traditional service providers such as IBM or Accenture. The industry’s focus is very much on the realm of real world data, so it is likely that mid-sized CROs will follow the example of Quintiles - that strategically merged with IMS to extend their global data competencies – to stay ahead of the competition.

Opportunities for smaller CROs

As many mergers involve eliminating existing competition, or entirely changing the nature of it, there is now a gap in the market that could spell opportunity for smaller CROs. As demand for outsourcing services increases, there is more and more opportunity for small and mid-sized CROs to pitch to new clients and increase their presence in the market.

Looking for opportunity abroad is a great way for smaller CROs to avoid being eclipsed by the giants in an already globalised market. In today’s competitive market it is important to be seen as capable of providing excellent services and a first rate customer experience. Having a global presence in significant territories, such as Europe and the USA, sends a positive message to sponsors.

Mergers and acquisitions are very disruptive for these leading CRO giants, who might require a brief adjustment period to get back up to full speed creating more opportunity for smaller CROs to step in and show their adaptability, skills and dedication.

Biotech expansion

Another current trend in the life science industry is emerging biotechs expanding into Eastern Europe from the USA, and vice versa. These highly specialised biotechs are always in need of niche outsourcing services, an ideal match for many small to mid-sized CROs. Therefore, these companies can leverage their niche services to make the most of both the current gap in the market and the biotech expansion trend. Emerging biotech sponsors can only benefit from having more options available to them, and they may find several added benefits of working with smaller CROs.

Indeed, there are many benefits for sponsors when they decide to engage with small to mid-sized CROs. Aside from feeling valued and prioritised, they will benefit from smaller teams that collaborate closely together to achieve timely results. This is not to say that larger CROs do not, but their approach to delivery is different and far more personalised. In addition, smaller specialist CROs are likely to adapt to new technology and innovation much faster than a CRO giant, that will need time to validate and accept changes. This adaptability is particularly important in the biotechnology field.

What smaller CROs need to consider when planning to expand:

CROs in, say, Eastern Europe compared with the USA are very different but there are excellent opportunities for expansion between these two territories.  However, not all growing CROs feel that they have the necessary capabilities to venture into unknown markets. There are certainly several challenges to face when considering another country's:

  • Data protection laws
  • Processes for hiring freelancers/contract staff
  • References and background checks
  • Cultural differences
  • Language barriers

Additionally, these CROs will need to recruit the appropriate staff to enable the transition. For example, a CRO in Germany wanting to expand into the West Coast of the USA will benefit from hiring personnel who have deep understanding of both markets. This could be a native German who lives and works in the US and has excellent knowledge of the current CRO landscape, while also understanding both cultures.  

In these instances, engaging with a recruitment consultancy like ProClinical, who has the required expertise across a global network, can help expanding CROs transition as smoothly as possible by acting as a cultural bridge to assist with all of the above matters and more.