Rationalization in the European pharmaceutical industry is leading to the formation of new CROs.

Rationalization in the pharmaceutical industry is not a new trend. It is also essential if drug makers are to achieve improved efficiency and reduce the cost of drug development and manufacturing.

In Europe, many big pharma firms are focusing on core areas of expertise and jettisoning research groups that don’t fit their new goals. These labs are often restructured as contract research organizations (CROs) serving the pharmaceutical sector. One advantage these CROs have over new startups is their depth of scientific expertise and knowledge of pharmaceutical company clients. CROs formed from pharma spin-offs also often have existing contracts with their parent companies.

In Europe, newly formed CROs spun off from large pharma also have opportunities to participate in government-funded initiatives, such as the European Lead Factory (ELF), a consortium comprising large and small pharma firms, CROs and universities. With $95 million in funding from the European Union and access to a 300,000-molecule library generated from data provided by seven multinational pharma companies, ELF provides a screening service to small-molecule drug discovery companies and academia. It has also synthesized 200,000 new compounds and spawned tow drug development partnerships. The CROs that have participated have been able to expand their services beyond basic research into late-stage drug development and clinical trial material manufacturing.

Bigger CROs in Europe, such as Evotec, have even been able to gain recognition as leaders in research related to specific diseases. The company has been expanding through the acquisition of facilities (and the associated experienced personnel) divested by larger pharma companies.