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KoreaBio: COVID-19 driving CRO sector M&A surge

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The CRO sector has grown during the COVID-19 pandemic, with higher demand – particularly for decentralized studies – increasing M&A activity according to industry group KoreaBio.

The global market for contract research organizations (CROs) grew 11.2% in 2020 according to a report by the industry group with demand from sponsors developing COVID-19 vaccines and therapeutics being major growth drivers.

The authors wrote, “The clinical trial environment is changing due to COVID-19.”

M&A surge

KoreaBio said the increased demand has let larger CROs grow market share, estimating the top 10 clinical contractors now hold more than 50% of the sector.

As a result, competition for work has increased markedly prompting CROs to seek to differentiate themselves from rivals.

And bolt-on acquisitions – when a contractor buys a smaller specialist services firm to broaden its offering – have emerged as a popular strategy according to KoreaBio.

The industry group cited Icon’s takeover of PRA Health Sciences for $12 billion in February as examples Thermo Fisher’s acquisition of PPD for $17.4 billion.

Decentralized trials

Demand for decentralized trials – clinical studies in which participants are tracked using remote monitoring devices rather than having to attend a trial site – has also increased during the pandemic.

The authors wrote, “As it is difficult to recruit clinical participants and visit medical institutions due to COVID-19, clinical trials can also be conducted face-to-face and non-face-to-face (hybrid), away from the existing offline method, or from patient recruitment to diagnosis and clinical data collection using mobile and wearable devices, remote monitoring,

“Distributed clinical trials (DCTs) encompassing remote prescribing are emerging,” they said, adding “The acquired companies are known for their strengths in mobile health platforms and distributed clinical trials.”

It cited US banking group Goldman Sachs and EQT Private Equity’s recently announced $8.5 billion deal for Parexel as evidence.

Image: iStock/Feverpitched

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