Contract Research Organization

A Contract Research Organization — CRO for short — is a service company that takes on research tasks for other firms. The client is usually a pharmaceutical company developing a new drug. Instead of handling every step itself, it commissions a CRO with specific sub-tasks: for example, planning and conducting clinical trials, i.e., tests on humans designed to show whether a drug works and is safe. CROs work on commission — they do not conduct research on their own account, but for payment on behalf of their clients.

CROs in drug development

Developing a new drug takes more than ten years on average and costs billions of euros. A large portion of this time is spent on clinical trials, which are strictly regulated. Authorities such as the European EMA or the American FDA require extensive evidence of efficacy and tolerability before a drug can be approved.

Smaller biotech companies in particular often lack the infrastructure to carry out such trials themselves. But large corporations also use CROs when their own capacities are fully utilized or a project requires special expertise. CROs can therefore make the difference between a drug reaching the market quickly or not. Delays at this stage not only cost money but, in the worst case, mean patients have to wait longer for a therapy.

What CROs actually do

The range of services is broad. A CRO can plan an entire trial: it determines how many participants are needed, which hospitals and medical practices will take part, and how data will be collected and analyzed. It then recruits trial participants, coordinates the participating clinics — often across several countries — and monitors compliance with all requirements. In the end, it prepares the reports that are submitted to the regulatory authority.

Many CROs have specialized in particular areas. Some focus on oncology, i.e., cancer medicine. Others are experts in rare diseases or in trials involving children, which carry special ethical and legal requirements. Larger CROs such as IQVIA, Covance, or PPD operate a global network of trial sites and employ tens of thousands of staff.

Quality assurance is an important aspect. Because the results of clinical trials have a direct impact on patients' health, CROs are subject to strict international standards known as Good Clinical Practice guidelines. Authorities can inspect CROs and revoke approval in the event of violations.

CROs in everyday news

The term regularly appears in business and pharmaceutical news. When a pharmaceutical company announces that it has awarded a contract worth several hundred million dollars for conducting a registration trial, there is almost always a CRO behind it. During the COVID-19 pandemic, the role of CROs came particularly into focus: they helped roll out the vaccine trials of BioNTech, Moderna, and other manufacturers across multiple continents in record time.

CROs are also a relevant topic on the stock market. Companies such as IQVIA or Icon are independently publicly traded. Their business is considered comparatively crisis-resistant, because pharmaceutical companies must continue research even in economically difficult times. At the same time, CROs occasionally come under criticism when trials have to be repeated due to errors or allegations arise that data was not collected properly.

Conceptually, CROs resemble other outsourcing service providers in industry: just as carmakers outsource parts of their production to suppliers, pharmaceutical companies outsource their clinical research. The difference lies in the stakes involved — with CROs, approvals and therapies for sick people ultimately hang in the balance.