The top 10 bio­phar­ma CROs in the world—mid-2017 edi­tion

Hud­dled with five em­ploy­ees in a tiny Chapel Hill house, Quin­tiles Transna­tion­al founder Den­nis Gillings be­gan break­ing down the many things drug com­pa­nies need­ed done when test­ing in hu­mans and start­ed do­ing them much more re­li­ably than his clients could, and with that, gave rise to the mod­ern CRO in­dus­try. The year was 1982 and the com­pa­ny has dom­i­nat­ed clin­i­cal out­sourc­ing for the 35 years since.

Now, af­ter a wave of con­sol­i­da­tion in the CRO space has trans­formed count­less small­er com­peti­tors in­to a hand­ful of big pub­lic play­ers, the com­pa­ny is still out front, but it no longer en­joys a vast gulf be­tween it and the rest of the pack vy­ing for a piece of bio­phar­ma’s mas­sive R&D bud­get.

To keep pace and stay in front, Quin­tiles en­gi­neered a big M&A deal of its own, but it had noth­ing to do with typ­i­cal CRO work. Quin­tiles­IMS is the brand now thanks to last year’s merg­er with IMS Health — the largest ven­dor of physi­cian pre­scrib­ing da­ta, which bio­phar­ma com­pa­nies use to price and mar­ket drugs.

Ari Bous­bib is Quin­tiles­IMS’ CEO, the po­si­tion he held at pre-merg­er IMS Health. Bous­bib was not a shoo-in choice to lead the com­bined firm. Tom Pike had been the CEO at Quin­tiles since 2012, suc­cess­ful­ly tak­ing the reins of the com­pa­ny from an enig­mat­ic founder and ramped up its main Re­search and De­vel­op­ment So­lu­tions busi­ness. In 2016 the work­horse di­vi­sion ac­count­ed for 65% of the com­bined com­pa­ny’s rev­enue, yet IMS in­sist­ed Bous­bib — a high­ly re­gard­ed ex­ec­u­tive who made his name over a 14-year stint at aero­space and build­ing gi­ant Unit­ed Tech­nolo­gies Corp — be in­stalled as CEO and chair­man as a con­di­tion of the merg­er. Pike re­tired rather than take a di­min­ished role at Quin­tiles­IMS.

Bous­bib’s emer­gence at the top is a sign point­ing where the in­dus­try is head­ed. “Tra­di­tion­al CRO ser­vices have be­come com­modi­ties,” says Ja­son Mon­teleone, pres­i­dent of Piv­otal Fi­nan­cial Con­sult­ing, who has ad­vised CRO boards on M&A trans­ac­tions. So big play­ers are look­ing for new ways to stand out.

Quin­tiles­IMS wants to com­pete in what it de­scribes in reg­u­la­to­ry fil­ings as a $130 bil­lion mar­ket op­por­tu­ni­ty com­plete­ly out­side of clin­i­cal de­vel­op­ment. It ranges from col­lect­ing so-called Re­al-World Ev­i­dence to sales force train­ing, while min­ing bil­lions of health­care trans­ac­tions for lu­cra­tive sig­nals. In these ar­eas and the tra­di­tion­al clin­i­cal work it has a size­able but shrink­ing ad­van­tage against the on­ly oth­er tru­ly glob­al, can-do-pret­ty-much-every­thing CROs in the world: PPD, Parex­el, Icon, PRA Health Sci­ences, Co­v­ance, and the soon-to-be re­brand­ed INC Re­search/in­Ven­tiv Health.

The pay­off comes from fol­low­ing a drug­mak­er’s mol­e­cule from ear­ly clin­i­cal R&D on through to com­mer­cial­iza­tion, sell­ing ever more ex­pen­sive arrange­ments each step of the way — with­out as­sum­ing the risk en­dem­ic to drug de­vel­op­ment. The promise of the new CRO ser­vices — which grew as Big Phar­ma and a boom­ing group of biotechs looked to out­source the clin­i­cal work — is that the har­mo­niza­tion of dis­parate da­ta is fi­nal­ly pos­si­ble, lead­ing to clients’ clin­i­cal tri­als re­cruit­ing faster,  their drug prod­ucts po­si­tioned bet­ter for both reg­u­la­tors and the com­mer­cial op­por­tu­ni­ty that might come lat­er. And if it reach­es mar­ket? Col­lect, an­a­lyze, and act on even more da­ta.

It’s a tall or­der. Lab test­ing gi­ant Lab­Corp turned heads by ac­quir­ing Co­v­ance in 2015. It added Chiltern ear­li­er this sum­mer for $1.2 bil­lion in or­der to ex­pand its clin­i­cal of­fer­ings. INC Re­search, found­ed in 1998 with roots in neu­rol­o­gy tri­als, closed their $7.4 bil­lion merg­er with the com­mer­cial-fo­cused in­Ven­tiv Health this month.

Is there more M&A in the works? Mon­teleone is lean­ing to­wards no — at least at the top end of the mar­ket — un­less a non-tra­di­tion­al play­er comes in like Lab­Corp did with Co­v­ance.  “Most like­ly we’ll see strate­gic deals like PRA Health Sci­ences’s ac­qui­si­tion of Sym­pho­ny Health,” he adds, where the Raleigh-based CRO ac­quired a health­care da­ta and an­a­lyt­ics provider. The mid-tier mar­ket, a few of which we name in our list be­low, is al­ways ripe for ac­tion.

Two CROs in the top 9 — PPD and Bio­Clin­i­ca —  are pri­vate, mak­ing a de­fin­i­tive rank­ing here im­pos­si­ble, so our proxy is the val­u­a­tion paid re­cent­ly by their pri­ma­ry own­ers.

There are no com­pa­ra­ble met­rics for the CROs list­ed in the #10 po­si­tion, but af­ter ask­ing sev­er­al in­dus­try sources their opin­ions who be­longed there, we’ve added a few con­tenders.

We’ll up­date this en­tire list again in the fall, when sure­ly, the names and places will have changed.

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