The US clinical research organization (CRO) market covers businesses that offer outsourced research and development services to pharmaceutical and biotechnology companies. Companies offer services in areas of early-stage drug discovery & development, clinical trials and comprehensive support services crucial for efficient and compliant drug development processes. We segmented the market based on the core service offering into: (i) discovery & preclinical; (ii) clinical, (iii) integrated CROs and (iv) CRO support services.

The CRO market is defined by the significant investments, lengthy development and approval timelines as well as regulatory challenges of bringing new medicines to market. The process of developing a single FDA-approved drug takes ~10-15 years, ~10-15k drug candidates and up to ~$2.5bn of investments (Charles River Laboratories, February 2023). This underscores a large addressable market for outsourced research services, in which players focusing on specific research stages or therapeutic areas face competition from integrated peers, CDMOs and life science conglomerates (Labcorp, Thermo Fisher Scientific) with drug discovery and trial capabilities. Herein, the market is poised for further consolidation as companies strategically merge to gain quick entry into high-demand specialty areas, address talent shortages, achieve scale dynamics and offer integrated services, meeting the client preferences for a one-stop CRO.

Investor-led interest in the US CRO market has been significant with >60% of the identified assets backed by financial sponsors (February 2024). Herein, investors are attracted to (i) stable and growing demand for outsourced research services, (ii) new business from novel modalities (e.g. gene & cell therapies), (iii) tailwinds from CRO digitalization and implementation of AI and (iv) buy-and-build opportunities in fragmented niches. These factors can be seen at play in the recent performance of KKR-backed Headlands Research. Completing 10 acquisitions over the past 5 years, the company strengthened its trial site capacity and expanded its offering for the high-growth neurodegenerative diseases niche.

ESG issues primarily cater to social and environmental concerns. While CROs contribute to society value by accelerating medical research, addressing safety considerations in trials, animal welfare and ensuring patient diversity remain top of mind for the industry. Additionally, sustainability leaders focus on mitigating environmental impact, with measures like decarbonization efforts and carbon offset purchases contributing to a more sustainable CRO landscape.