Contract Research Organization Services Procurement Category Market Research Report from IBISWorld Has Been Updated

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Although contract research organization service prices have increased in line with rising demand, buyers have benefited from the market's low level of concentration, which has encouraged suppliers to compete on the basis of price. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Contract Research Organization Services in its growing collection of procurement category market research reports.

IBISWorld industry market research
The urgent need for new and more effective treatments will prompt firms to outsource more clinical trials to CROs, boosting demand and prices in the next three years

CRO services have a buyer power score of 3.5 out of 5, reflecting a mixture of favorable and unfavorable conditions that have been influencing buyer negotiation power during the three years to 2014. According to IBISWorld market research analyst, Anna Son, "During the period, the price of contract research organization services has been increasing because pharmaceutical and medical device firms have expanded their research and development (R&D) budgets, triggering demand for clinical trials." In the next three years, prices are forecast to grow on the back of surging demand as the need for new product development intensifies. Despite rising prices, price volatility is projected to remain minimal. Buyers benefit from low price volatility because they can make more informed decisions without fear of major price swings.

Low market share concentration and mounting competition among testing firms further bolster buyer power. "Despite a few prominent players (such as Quintiles and Parexel), most CROs are small and medium-size firms that operate on a local or regional basis," says Son. Although large firms offer a wide range of clinical trials, boutique CROs have a breadth of knowledge in a particular field and can deliver more effective and creative solutions. During the past three years, market concentration has been increasing slightly as a result of large CROs' efforts to acquire smaller firms. Although consolidation is projected to continue through 2017, the entrance of new players will help ensure market competition, allowing buyers to maintain their negotiation power.

However, the highly specialized nature of contract research organization services and high switching costs undermine buyer power. Due to the unique nature of each drug and medical device in this market, suppliers must craft contracts tailored to buyers' specific needs. High product specialization and a limited number of CROs with adequate resources to perform specialized clinical trials allow suppliers to charge a premium for their services. Additionally, the low availability of substitutes further restrains buyer power because buyers without the capacity and qualified personnel to perform clinical trials in-house have no choice but to outsource these functions to CROs. For more information, visit IBISWorld’s Contract Research Organization Services procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of contract research organization (CRO) services. Suppliers are referred to as CROs and buyers are pharmaceutical, biotechnology and medical device companies that outsource research. CROs perform physical, chemical and other analytical testing for commercial purposes that occurs in a laboratory or onsite (i.e. where the product is manufactured or developed). Most results from market-led tests are checked against government regulations and environmental, industrial and product standards. This report excludes medical and veterinary testing labs.

Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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