From "Manpower Outsourcing" to "Data Experts": Observations on Role Transformation in the CRO Industry

Pharmaceutical companies' strong desire to run better-designed, lower-cost clinical trials is prompting contract research service providers, commonly known as CROs, to aggressively expand their business footprint. Over the past year, Thermo Fisher, Cambrex, and Charles River Laboratories have each spent hundreds of millions of dollars on M&A deals to expand their service capabilities.

Data services, in particular, have become a recent industry hotspot. Pharmaceutical and biotech companies are eager to understand what support CROs can offer in data collection, analysis, and even validation.

"The CRO industry started with people—it was a 'fee-for-service' outsourcing model, and that was our strength," said Dawn Anderson, managing director of Deloitte's R&D and life sciences consulting practice. She previously worked at inVentiv, Cognizant, and Quintiles.

Now, the business model has shifted to "no longer relying too heavily on manpower, but rather on the ability to integrate data."

Real-world data as a catalyst

The pharmaceutical industry sits on vast amounts of patient data, and the volume continues to climb. Over the past two decades, the number of clinical trials has grown exponentially, and the data generated by these studies has risen accordingly.

Twenty years ago, a typical Phase 3 trial mightgenerate about 3 million data points; but according to Anderson, with the proliferation of wearable devices and the rise of real-world evidence, researchers can now collect more than one million data points per patient per day.

Pharmaceutical companies want to make fuller use of this massive data, and the earlier the better. They are particularly interested in CROs' ability to assist with real-world data—information available from sources beyond the scope of clinical trials.

Real-world data is having a growing impact on drug approvals, payer decisions, and even label expansions. For example, electronic health records helped Pfizersecure an additional approval for its marketed breast cancer drug Ibrance using real-world data。

Open signals from regulators have further fueled industry interest. Just last month, acting FDA Commissioner Ned Sharpless said the agency is "open" to considering real-world evidence. The FDA is also working to streamline and standardize how clinical trial researcherscollect and analyze real-world data.

As a result, CROs are investing more time and money in data services. Jonathan Shough, chief information officer at Covance, told BioPharma Dive that the company's venture capital fund is investing in companies that can apply mobile health technology—a common tool for real-world data collection—in clinical research.

"This improves patient engagement and enhances the value and richness of the data we collect," Shough said. "I think this trend will continue to grow, and our level of involvement here will be substantial."

Challenges in data services

However, data services are not a guaranteed moneymaker. PRA Health Sciences, one of the largest CROs in the U.S., saw revenue in its data solutions business unit decline 2.4% in the first quarter of this year.

Data collection and analysis require significant upfront investment in technology, integration is difficult, and skilled professionals are needed to operate these systems. According to Shough, Covance is recruiting data scientists to supplement its existing bioinformatics team.

On the talent front, healthcare companies have longstruggled to compete with big tech companies forrelevant talent.

"CROs must evolve to survive," said Deloitte's Anderson. "The giants—Apple, Verily, Amazon—all have incredible data technology capabilities. They could become new players in the future."

Operational challenges also come from the pharma side. Michelle Hoiseth, chief data officer at Parexel, noted that when pharmaceutical clients ask to delve into real-world data, it's not easy to discern their exact intent, because the answer depends heavily on who they plan to submit the data to. Based on her experience, Hoiseth believes that progression-free survival data for cancer drugs means far more to regulators than to payers.

"Our clients will say, 'Come talk to us about real-world data,' and we're confused," she told BioPharma Dive. "The issue isn't the data itself; it's what you do with it."

Regulators can also be a source of frustration. Although the FDA appears more open to non-clinical trial data, uncertainty remains over which tools and validation methods the agency will accept.

Strong market demand

Despite these risks, demand for CROs' data services and broader clinical services is expected to remain high. Grandview Research projects that pharmaceutical companies will continue outsourcing R&D operations, driving the global healthcare CRO market to $55 billion by 2025.

This demand has already fueled several major deals in the industry, including mergers between INC Research and inVentiv, Labcorp and Covance, and Quintiles and IMS.

Young biotech companies in particular rely on CROs for the technology and clinical platforms needed for drug development, much of which is now targeting smaller patient populations.

Meanwhile, large pharmaceutical companies are slowly but steadily bringing data and technology capabilities in-house. This in turn could put greater pressure on CROs to prove their value.

"Pharma companies have their own clinical trial data, plus the real-world data they buy and put on platforms, plus their other technology investments—our job is to complement those capabilities and improve ROI," Hoiseth said. "Not to compete with them, or to think we can build something adjacent that's more valuable than what they've already invested in."