The increasing role of contract research organizations in the evolution of the biopharmaceutical industry

Abstract

The role played by contract research organizations (CROs) in the last decades has been almost completely neglected by the economic and managerial literature, which at most presents an outdated and misleading portrait, of firms performing routine clinical tasks. This study aims at filling this knowledge gap, by describing the evolution of the CRO segment of the biopharma industry in the last two decades, discussing the foundations of CROs' comparative advantage and underlining the consequences of their growth for the effective functioning of the whole industry. Importantly, this study argues that the increased role of CROs in performing fundamental phases of R & D has made the anatomy of the biopharma system more functional: in fact even if the turbulence and mortality of IPbased biotech firms is extremely high, if they rely to a great extent on CROs, the experience acquired to carry out their projects -which mostly fail -does not get lost but cumulatively enhances CROs' capabilities.