With more drugmakers outsourcing more trials to contract research organizations, few should be surprised that the CRO sector is generating investor interest. The attention-grabbing deal announced yesterday in which two private equity firms - Carlyle Group and Hellman & Friedman - agreed to pay $3.9 billion in cash to buy Pharmaceutical Product Development is no random bet.
Might there more be more such acquisitions? Clearly, CROs are on the radar screen. Why? For one thing, prices are rising. A survey by RW Baird analyst Eric Coldwell found 42 percent of drugmakers say prices rose in this year’s second quarter, up from one-third in the first quarter. The backdrop is a projected 3.6 percent to 8 percent growth in R&D budgets, on average, among drugmakers and biotechs.
Large and mid-sized drugmakers reported fewer price decreases, while small firms, which include biotechs, reported more price decreases in the his most recent survey. Howeve, the magnitude of price decreases was flat to lower across the board. “The vast majority of internal pharma staff surveyed believe that they are spending the same, or more, per unit of outsourced work today than in the recent past,” Coldwell writes in an investor note.
For More information click here: Pharmalot: Why Contract Research Organizations Are Hot
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