A steady stream of M&A has continued to reshape the contract research organization universe.
As a case in point, the CRO Fortrea announced plans earlier this month to acquire Worldwide Clinical Trials’ “early-phase services division” in a $45 million deal that includes a clinical pharmacology unit, bioanalytical lab operations and biospecimen storage facility.
This ongoing trend has also included Worldwide Clinical Trials’ acquisition of Catalyst Clinical Research on Feb. 16; and several deals by ICON, which snapped up HumanFirst and KCR in 2024, PRA Health Sciences in 2021, and Clinical Research Management in 2016, among many other acquisitions over the past decade.
Fortrea said the deal with Worldwide Clinical Trials will allow it to execute early-stage studies and boost its end-to-end clinical development platform. And indeed, the promise of a “one-stop shop” is a major selling point for big CROs adding new services and operations to their ranks via M&A.
Another large player in the space, Thermo Fisher Scientific, acquired clinical research services firm PPD for $17.4 billion in 2021, significantly expanding its offerings to pharma companies.
“Because of the acquisition of PPD, we are now able to support drug substance manufacturing, drug product manufacturing, clinical trial materials and run clinical trials,” said Anil Kane, global head of technical and scientific affairs, pharma services, at Thermo Fisher Scientific. “We have a unique position to support our biotech partners and the pharma industry with a one-stop shop.”
Each deal can give CROs new services to pitch to drugmakers.
Thermo Fisher boosted its portfolio again in March when it completed its $8.9 billion upfront cash acquisition of clinical trial endpoint-data firm Clario. Thermo Fisher said Clario’s platform had supported approximately 70% of FDA and EMA novel drug approvals over the past decade.
“We have seen the benefits, when we talk about integrated CDMO [and] CRO solutions that help small- and mid-sized biotechs to grow by giving them access to an established network and credible resources, saving them time and money across the sponsor timelines,” Kane said.
But the consolidations can also create complications for drug developers, especially small and mid-sized biotechs, when dealmaking transfers their clinical trials to a different CRO than the one they initially signed on with.
Here are a few of the tradeoffs drug developers are navigating amid the shrinking pool of CRO vendors.
Pro: The one-stop shop
Bringing end-to-end clinical trial functions within a single vendor is one potential advantage of CRO consolidation.
“We've started to see more inquiries, more biotechs wanting to embrace the multiple offerings within the same company,” Kane said. “And these could be from a clinical manufacturing perspective, covering different modalities, as well as the clinical trials.”
That’s what Fortrea is touting with its new early-phase services, which it said will now include capabilities for first-in-human studies through phase 4 and post-approval evidence generation. Fortrea said the deal will also ease “operational handoffs between clinical and bioanalytical functions.”
Kane argued that a one-stop shop can reduce the burden of managing multiple vendors, which is especially tough for small biotechs.
“It takes resources and time and governance and direction,” he said. “For a biotech company, to provide that level of guidance, direction, and manage multiple vendors is extremely difficult.”
Con: Lack of continuity
Mergers and acquisitions don’t always seamlessly combine two separate companies. They can reshuffle or eliminate staff, shift an organization’s culture, or require the integration of existing software and tools, potentially causing delays and disruptions to the already lengthy and expensive clinical research process.
Analysts and sponsors frequently cite these factors among the CRO consolidation risks, according to a report by IntuitionLabs. Kane similarly said biotech companies need to “watch out for” the stability of their potential partners.
“Continuity is certainly going to be important and be a differentiator, not just the capability. So as consolidation continues, the partners who can show a stable and identified expert team and a genuinely connected operating system, not just a combined logo, are likely to stand out more over time,” he said.
Consolidation also raises the bar for vendor evaluation, Kane noted, saying that biotechs should “treat vendor evaluation as an ongoing discipline rather than a one-time decision, since a partner's structure or ownership can shift well before a program reaches commercialization.”
Pro: Cost- and time-saving potential
Bigger, consolidated CROs could eventually lead to less competition and higher costs, according to analysts cited in the IntuitionLabs report. Moreover, small biotechs operating on shoestring budgets may not be able to afford working with bigger players, the report said.
M&A proponents, however, say greater efficiency in larger, integrated firms could lead to cost and time savings.
Kane pointed to one global program that tried to manage multiple clinical trial sites with more than 800 patients across many geographies but was plagued by “fragmented governance and startup inefficiencies,” as an example of when working with a large CRO can be a boon.
“Moving to a unified governance and having integrated KPIs and dedicated specialists embedded across functions cut the sponsor meeting time by 35% and activated the first site 13 days ahead of schedule,” he said.
Con: Losing specialized expertise
While mega-sized, consolidated CRO firms can offer a wide depth and breadth of services, they often lack the more niche expertise that boutique firms offer, according to the IntuitionLabs report. And after a smaller firm is acquired, the larger company might absorb and dilute these specialized services — essentially swallowing the standalone capabilities of the niche provider once the deal is done, according to an analyst cited in the report.
Regardless of the outcome, Kane thinks CRO consolidation shows no signs of slowing down.
“We believe that this is a trend to stay,” Kane said, adding that the industry could “see more players over the next five years with integrated platforms.”
“There could be smaller players for running niche, specialized areas. But certainly, we believe that integration of CDMOs and CROs is going to catch up,” he said.
