cros and clinical trials: strategic partnerships driving future growth

CROs & Clinical Trials:Strategic Partnerships Driving

Future Growth?

December 14th, 2010

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Agenda

• CRO Market Overview

• 2009-2010 Performance Review

• Tactical vs. Strategic Outsourcing

• Review of Major Strategic Deals

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What do CROs offer?

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Factors Affecting Market Growth

CONTRACT RESEARCH ORGANIZATIONS MARKET (2010-2017)

Shift Toward Strategic Outsourcing

Pressure to Lower Fixed Costs

Improving R&D Efficiency and Quality

Demand for Global Trials

Stringent Regulatory EnvironmentRising R&D Cost

Pressure to Improve Clinical Pipeline

Integration of Pharma and Biotech Commoditization of Services

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CRO Market Structure

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Review of 2009-2010 CRO Performance

Top 6 Publicly Traded CROs: Covance, Charles River, ICON, Kendle, Parexel and PPD

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Tactical vs Strategic Outsourcing

• Project-by-project focus • Integrated program outsourcing throughout lifecycle

• Competitive bidding • Funnel a large percentage of work to a few strategic partners

• Inconsistent monitoring • CRO performance monitored and tracked by internal benchmarks

• Superior-subordinate relationship

• Well-defined governance structure

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Types of Outsourcing Relationships

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Review of Major Strategic Deals

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Covance – Eli Lilly (2008)

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PPD – Merck (2009)

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Covance – Sanofi Aventis (2010)

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Review of Deals

Win-WinWin-Win

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Key Strategic Objectives

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CRAMsCRAMs

CROsCROs Drug ManufacturersDrug Manufacturers

Contract Research and Manufacturing Contract Research and Manufacturing OrganizationsOrganizations

Emerging Hybrid Business ModelEmerging Hybrid Business Model

• Global scale ─ ability to run clinical trials across global regions

• eClinical capabilities for clinical trial management

• Access to patient pools

• Global scale ─ ability to run clinical trials across global regions

• eClinical capabilities for clinical trial management

• Access to patient pools

• Scalability of drug manufacturing from clinical trials to commercialization

• Reduces fixed costs for pharmaceutical industry

• Access to proprietary drug delivery platforms

• Scalability of drug manufacturing from clinical trials to commercialization

• Reduces fixed costs for pharmaceutical industry

• Access to proprietary drug delivery platforms

Contract Services Employing Hybrid Business Models

Source: Frost & SullivanSource: Frost & Sullivan

16

Questions?

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