Small to midsize pharmaceutical operating companies are reshaping the pharma ecosystem.  So it’s no surprise that they are also driving contract research and manufacturing business. In our latest quarterly survey, Cleveland Research Company, our third-party research partner, interviewed representatives from CRO and CMO companies to get their perspectives on trends during the fourth quarter of  2013.

This article summarizes some of the key findings from that survey. Please email [email protected] if you’d like to receive a summary of the report in PDF format, or if you’d like to participate on our next survey of this type.

In this report, 57 contract pharma company professionals responded, representing an equal number of contract firms.  37% of them described their companies as CMOs or CDMOs, 38% said they worked for CROs, while 25% described their firms as being both CRO’s and CMO/CDMO’s (Figure 1).

Summarizing results, first for the predominant CMO group, 33% said annual revenues ranged from $6 million to $30 million, while an equal number said revenues exceeded $75 million. (Figure 2)

According to CMO respondents, 26% of revenues came from small and mid sized companies, with 20% from Big Pharma. (Figure 3).

Most of their business was in in Phase II/III work, with 85% of respondents saying that their companies do this type of work. 77% said they worked on scaleup and commercial projects, and an equal number on Phase I projects. In addition, 69% said they handled formulation and method development, while 54% said they offered discovery and preclinical manufacturing services. (Figure 4)

Reported CMO revenues were down somewhat, falling from 4.1 in the final quarter of 2012 to 3.6% during the same period last year. (Figure 5)

However, respondents expect overall growth to reach 7.3% next year. 42% said that their companies’ revenues from small and mid-sized companies had increased since last year, and 9% said revenues from generics companies were also up.  Pricing was also addressed in the survey. Among the CMO’s 25% said pricing was slightly worse last quarter, but half saw no change in pricing. Results were markedly different for CROs, 37% of whom reported no change in pricing over the past three to six months. 
However, an equal number saw pricing as slightly worse, and 11% saw it as significantly more challenging.  Taking a dissenting view, 16% reported that pricing was improving slightly.  Overall, however, 42% saw pricing getting worse, and expected it to be more competitive than earlier in the year.  (Figure 6)

For contract research companies, respondents said that 30% of revenues came from small and mid sized companies, with 31% from Big Pharma clients. (Figure 7)

They reported that 27% of business came from Phase II/III work, 23% from discovery and pre-clinical work, and 24% from Phase I projects. (Figure 8)

47% reported revenues of less than $5 million, with 32% describing revenues as ranging from $6 million to $30 million, and 5% reporting annual revenues between $13 million and $50 million.  The remaining 16% said their annual revenue exceeded $50 million.