No.1865
05/15/2018

CRO and SMO Markets in Japan: Key Research Findings 2017

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the domestic markets of CRO (Contract Research Organization) and SMO (Site Management Organization) and has clarified the trends of market players and the future outlook.


Summary of Research Findings

Pharmaceutical firms aim to develop innovative new drugs by adopting advanced technologies, which tends to raise the expenses for R&D.  Because development of new drugs requires long period of time, with the degree of difficulty to generate new drugs has recently been increasingly high, the burden of clinical trials expenses during the development has become especially large for pharmaceutical companies.  On the other hand, because the investment for R&D to generate epoch-making new drugs is indispensable to pharmaceutical enterprises, the R&D expenses are likely to expand furthermore.

According to JCROA (Japan CRO Association), the total of entire sales of its 26 member enterprises in 2016 have increased by 12.7% from the previous year to attain 172,300 million yen.  There are many other leading companies, as many as 20 enterprises, in the domestic CRO market that do not belong to JCROA.  The entire domestic CRO market, including those that are not the member of JCROA in 2016 is estimated to achieve around 200,000 million yen, based on the sales of the businesses.

On the other hand, according to JASMO (Japan Association of Site Management Organizations), the total of entire sales (only SMO business) of its 35 member enterprises in 2016 have increased for the first time in four years by 7.4% from the previous year to attain 35,214 million yen.  There are some other leading companies in the domestic SMO market that do not belong to JASMO, together with some small, community-based SMOs that do not intend to expand their business contents, or that try to develop business by allying themselves with specific medical institutions.  The entire domestic SMO market, including those that are not the member of JASMO in 2016 is estimated to achieve around 38,000 million yen, based on the sales of the businesses.

Noteworthy Topics

R&D Trends at Pharmaceutical Companies and Domestic CRO and SMO Market Trends

Pharmaceutical enterprises tend to invest the resources in their core areas that each company has advantages in order to improve productivity of drug development.  At the same time, they aim to develop epoch-making drugs to respond to unmet medical needs (the needs of drugs for the diseases without effective therapies found yet).  When looking at the areas that each company places importance on, many seem to develop the drugs for cancer and central nervous system disease.  This is because it is more difficult to create new drugs that exceed the existing ones in circulatory system disease and metabolic disease.  In addition, there are higher unmet medical needs for cancer and central nervous system disease.

The reason of the favorable conditions of the domestic CRO market is that outsourcing of tasks has been pressed ahead at pharmaceutical enterprises aiming to reduce costs and increase efficiency in clinical tests.  In particular, outsourcing has been made progress in the areas of monitoring, data management/statistical analysis, and recently, of supporting the process of providing accurate safety information.  Also, there have been more tasks other than drugs, i.e., development and consulting business in the area of medical instruments and regenerative medicines.  In the future, CROs are likely to accept orders in the new areas, including regenerative medicine, clinical research, and post-marketing surveillance, in addition to progress in the existing outsourcing tasks of clinical testing at pharmaceutical enterprises.  Furthermore, there are increasing orders by bio-venture and academia, though the project sizes are still small.

On the other hand, in the domestic SMO market, there are many pharmaceutical enterprises that have finished developing medicines for life-style related disorders, which led them to shift to develop medicines for cancer and central nervous system disease, whose level of difficulty high.  This has increased the clinical trials that needs longer period of time between the order acceptance and the sales recorded.  Also, the number of clinical trial protocols is on the rise but the contracted number of cases has been declining.  The longer the trial becomes, cost of sales rises and gross margin declines, which are the challenges for SMOs.  In the changing market environment, increasing number of SMOs, primarily the large ones, has begun placing importance on clinical tests at hospitals rather than at clinics.

Research Outline

1.Research Period: November, 2017 to March, 2018
2.Research Object: Pharmaceutical companies, CRO (Contract Research Organizations) and SMO (Site Management Organizations)
3.Research Methogology: Face-to-face interviews by the expert researchers, survey via telephone/email, and mailed Questionnaire

What is the CRO Market?
The CRO (Contract Research Organization) market indicates the market of various services that support all or some of the tasks needed for clinical testing at pharmaceutical firms.  The CRO market in this research has observed such tasks as monitoring (i.e., making visits and negotiations that are tasks representatively conducted at medical institutions), data management tasks that make the returned CRF data digitalized, and statistical analysis to statistically validate the efficacy of investigational drugs.  The market size has been calculated based on the sales of the businesses.

What is the SMO Market?
The SMO (Site Management Organization) market indicates the market of the services that support clinical testing only for a certain medical institution (trial institutions) that the organization (service provider) made a contract with.  The SMO market in this research indicates such representative tasks as management tasks of clinical trials (i.e., arrangement, management, retention of various documents generated in the course of clinical testing), coordination tasks of clinical trials (i.e., dispatching and coordinating an expert staff with pharmaceutical knowledge), and etc.  The market size has been calculated based on the sales of the businesses.

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