Robert W. Baird & Co. analyst Eric Coldwell is “fairly upbeat” about contract research organizations’ prospects, projecting that the industry will generate earnings-per-share growth in the mid-teens this year.
The CRO industry should benefit from “modest” growth in research-and-development spending by pharmaceutical and biotechnology companies as well as “incremental” increases in outsourcing, Coldwell noted in a research note issued Tuesday.
CROs help pharmaceutical and biotech companies test experimental drugs and analyze the results.
The Triangle is the epicenter of the industry and boasts three of the world’s largest CROs: Quintiles, which ranks No. 1, INC Research and PRA Health Sciences. All three of those companies are publicly traded, with INC and PRA going public in November.
Shares of publicly traded CROs advanced 25 percent in 2014, Coldwell wrote. He anticipates revenue for the industry rose 7 percent last year.
Last year 41 new drugs were approved by the Food and Drug Administration, a 10-year high.
“Healthy clients mean happy service providers,” Coldwell said.