No.2402
05/08/2020

CRO & SMO Services Market in Japan: Key Research Findings 2019

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the R&D strategy of pharmaceutical companies, the markets of CRO services and SMO services in Japan, and found out the trends at market players and the future perspectives. 


Summary of Research Findings

While major domestic pharmaceuticals are facing challenges in domestic business due to predicaments like drug price revision spurred by the tax hike in October 2019 and promotion of the use of generic drugs, major players are generally showing stable growth for FY2019, against a back drop of expansion of new drugs sales overseas. On the other hand, harsh situation continues for midsize firms that have primary focus on domestic business; many of them are expecting sales to level off or sales and profits to decline. 

Since every pharmaceutical companies aim to develop innovative new drugs by applying advanced technologies, their R&D expenditures tend to rise. Escalation of R&D cost is unavoidable in the future as well; however, as it is imposing tremendous burden on pharmaceuticals, needs are arising for additional improvements in managerial efficiency and promotion of rationalization in R&D. Moreover, as capital increase is critical to continue large investments in R&D, pharmaceuticals are seeking business expansion by M&A and other measures. Global pharmaceuticals are still aggressive for M&A, accelerating global pharmaceuticals to turn into giants. Against these movements, major domestic pharmaceuticals that consider globalization as an issue of utmost importance are also embarking on large-scale M&A. 

According to Japan CRO Association (JCROA), annual sales turnover of 33 member companies for 2018 decreased by 1.2% from the previous year, generating 190,100 million yen*. It was a first time since the foundation of association to see the drop in sales. Nevertheless, as the decline is due to the impact of some companies spinning off their CSO (Contract Sales Organization) operations, it is assumed that virtually the growth is continuing. Furthermore, there are quite a few leading companies in the domestic CRO services market that are not the member of association, and more than 20 other non-member companies exist. Size of the domestic CRO services market (based on the sales at businesses) including sales of these companies is estimated to reach 225,000 million yen for 2018.


*1. Value for 2017 is a sum of 32 member companies. 

On the other hand, according to Japan Association of Site Management Organizations  (JASMO), sales turnover of 29 member companies (SMO businesses only) for FY2018 was 36,657 million yen, down 7.2% from the preceding fiscal year* recording decrease for first time in 2 years. In domestic SMO services market, there are some major companies other than JASMO member companies, as well as small-sized SMO that are community-based and/or in partnership with specific medical institutions. Considering all of these services, the domestic SMO services market (based on the sales at businesses) is projected to reach 41,000 to 42,000 million yen for FY2018.

*2. Value for FY2017 is a sum of 31 member companies.

Noteworthy Topics

Trends in R&D of Pharmaceutical Companies, Domestic CRO Services Market, and SMO Services Market

Pharmaceutical companies make efforts to improve productivity in drug discovery research by concentrating investments on core domain that they have strength in, while striving to develop breakthrough drugs to address unmet medical needs (medical needs to address disorders without effective therapy). Viewing from key business area/domain of each company, it is noted that majority of companies position oncology as their key domain, and many prioritize areas of central nervous system and immunology. A large number of companies concentrate on these domains because invention of new drug that exceeds existing drugs is difficult than ever for cardiovascular diseases and metabolic diseases, as drug developments has already been advanced significantly in these fields. Moreover, the fact that unmet medical needs are higher particularly for oncology, central nervous system and immunology is also leading the companies to reinforce emphasis on these areas.

As a search for chemical compounds advanced, it added tremendous complexity in discovering new molecules with pharmacological effect.  To solve the issue, pharmaceutical companies are making efforts to enhance in-house R&D capabilities as well as introducing external technologies by strengthening joint research with domestic/international pharmaceuticals, biotech companies, universities, and others like research institutes. While new drug development from research laboratory within pharmaceuticals diminish, new drug discovery by biotechs are expanding. 

Regarding the domestic CRO service market, number of development items by pharmaceuticals is expected to expand at certain range. At the same time as development of blockbuster drugs decrease, items for smaller market or orphan drugs (medicines intended to treat rare diseases) are increasing. Needs for CRO service is likely to rise with an upturn in outsourcing ratio among pharmaceuticals; however, demand for monitoring operation cannot expect significant increase due to advancements in streamlining of clinical studies including IT introduction. Correspondence to globalization and provision of new services is assumed to be the key for market growth.

Although the CRO market continues to anticipate stable growth hereafter, growth rate is likely to slow down. While stagnation of market growth is expected, considering challenges in new service development, entrance of new foreign capital companies and enhancement in foreign companies’ marketing activities, competition among CRO service providers is expected to become fiercer.

Meanwhile, in the domestic SMO services market, clinical trials that take longer time from contract to revenue generation is increasing as pharmaceuticals shift their direction from drug development for matured market of chronic lifestyle diseases to diseases with higher level of difficulty like cancer, central nervous system disorders, and rare diseases. In addition, number of clinical trial protocols (number of documents describing details of clinical studies) which had been on the rise until FY2016 made a downturn from FY2017, and the number of contract cases are shrinking. Lengthening of clinical studies has increased issues for SMO service companies, such as rise in cost of sales and drop in gross margin ratio. Under the environmental changes, increasing number of firms, primarily major SMO companies, adds more emphasis on hospital market development through establishment of business relationship with hospitals and enhancement of clinical trial coordinators, training them to be capable of handling clinical studies on intractable diseases.

Research Outline

1.Research Period: November 2019 to March 2020
2.Research Object: Pharmaceuticals, CRO (Contract Research Organization), SMO (Site Management Organization)
3.Research Methogology: Face-to-face interviews by the specialized researchers, surveys by telephone and email, questionnaires sent via mail

CRO & SMO Services Market in Japan

CRO (Contact Research Organization) is a service business that provides a series of services in clinical studies (clinical trials) at pharmaceutical companies under outsourcing contract to conduct/support operations partly or entirely. In this research, CRO services market includes following services: a typical operation of clinical studies such as monitoring (visiting, negotiating) at medical institutions, data management operation, i.e. digitization of collected clinical report forms, and statistical analysis to verify effectiveness of investigational new drug. Size of the market is calculated based on the sales at businesses. 


SMO (Site Management Organization) is a service business that provides clinical studies (clinical trials) -related services to a specific medical institution (facility conducting clinical studies) under exclusive contract. In this research, SMO services market includes a typical operation involved in administrative tasks in clinical studies (preparation/management/archiving of all kinds of documents involved in clinical studies)  and clinical research coordinator tasks (dispatching and coordinating specialized staff with nursing or pharmaceutic expertise). The market size is calculated based on the sales at businesses.  

<Products and Services in the Market>

CRO services market, SMO services market, R&D strategies of pharmaceutical companies

Published Report

Contact Us

©2019 Yano Research Institute Ltd. All Rights Reserved.
The copyright and all other rights pertaining to this report belong to Yano Research Institute.
Please contact our PR team when quoting the report contents for the purpose other than media coverage.
Depending on the purpose of using our report, we may ask you to present your sentences for confirmation beforehand.