June 23, 2013 – When Jeff Williams was thinking about starting a pharmaceutical services company a decade ago, his first impulse was to locate the business along the coast of Florida so that, during his off hours, he could indulge his passion for the beach.
But Williams looked at the concentration of similar companies in the Triangle and decided this was the place to be.
“The more I thought about it,” said Williams, co-founder and CEO of Clinipace Worldwide, “the more I was thinking that it would be a mistake (to start the business in Florida) because there is so much talent in the RTP area, specifically in our industry. … It’s a no-brainer to start it here.”
Today Morrisville-based Clinipace is a thriving company with about 60 employees at its Morrisville headquarters and nearly 500 worldwide. And the cluster of companies that first drew Williams to the area just keeps getting larger.
Known as CROs – contract research organizations or, alternatively, clinical research organizations – these firms help pharmaceutical and biotechnology companies conduct the extensive tests on experimental medicines that government regulators require before they will consider approving a drug.
CROs have become so pervasive in the Triangle that the region itself has become a recruiting tool, as workers consider the abundance of employers to be both a security blanket and a way to advance their careers by jumping to a competitor. Industry executives say the Triangle now has more CROs, and more CRO workers, than anyplace else.
“I can’t go to a restaurant without seeing a competitor,” said Paula Brown Stafford, president of clinical development for the world’s largest CRO, Quintiles, which is based in Durham. Quintiles has more than 2,000 workers in the Triangle and 27,000 worldwide.
Three of the world’s eight largest CROs are based in the Triangle – Quintiles, INC Research and PRA Holdings – and a fourth, PPD, is based in Wilmington and has 1,500 employees in the Triangle with 1,700 in Wilmington. INC and PRA were started elsewhere but chose to move here in 2001 and 2008, respectively, because of the local talent pool.
Altogether, the N.C. Biotechnology Center counts more than 110 businesses in the Triangle that it classifies as “clinical trials companies,” a category that includes some companies that aren’t strictly defined as CROs. Those businesses employed 12,601 workers in the Triangle in the first quarter, 17 percent more than the first quarter of 2010.
“The CRO world … is growing ahead of the overall economy” when it comes to hiring, said Mark Lanfear, global practice leader for life sciences at staffing giant Kelly Services.
CROs provide a wide variety of services, including setting up clinical trials, recruiting thousands of patients to participate in a trial, analyzing the vast volumes of data generated, and preparing the results for submission to regulators. Many of the industry’s workers are highly trained and well-paid. For example, Quintiles’ global workforce includes 800 M.D.s and 850 Ph.D.s. And the average annual compensation for a biostatistician in the Triangle is $84,826, according to Kelly Services and CareerBuilder. CareerBuilder’s is partly owned by McClatchy, the corporate parent of The News & Observer.
$24.3 billion in revenue
The public profile of the Triangle’s CRO industry rose last month when Quintiles raised nearly $950 million with an initial public offering of stock. A second CRO – PRA, which has about 450 employees at its Raleigh headquarters and more than 5,000 worldwide – has announced that it, too, is considering going public.
CROs last year generated an estimated $24.3 billion in revenue, according to Jefferies Research, and the industry’s prospects appear bright. Jefferies projects that CRO revenue will rise about 6 percent this year as drug companies look to save money by outsourcing more of their clinical trial work at the same time that they are boosting their spending on research and development.
“Pharmaceutical companies have large objectives before them to increase their productivity and reduce their expenses and reduce their (product development) cycle times in order to get to market,” said Susan Atkinson, senior vice president at PPD, which has 12,500 employees worldwide. “Certainly PPD’s focus is, we are bringing a lot of innovative solutions to help our clients with their objectives.”
Today the CRO industry employs more clinical research staff than the pharmaceutical industry, whereas a decade earlier the ratio was nearly 2-to-1 in favor of the drug companies, according to the Tufts Center for the Study of Drug Development.
Years ago “the CROs were maybe seen as the poor relation relative to pharma,” said Jamie Macdonald, CEO of INC, which has 700 employees at its Raleigh headquarters and 5,000 worldwide. “But I actually think that has changed. We have a lot of ex-pharma people on staff. They see the buoyancy in the CRO industry as an attraction.”
Quintiles was an industry pioneer when it was founded in 1982 by Dennis Gillings, who at the time was a biostatistics professor at UNC-Chapel Hill.
Stafford was employee No. 23 when she joined Quintiles as a biostatistician three years later.
Back then, “we didn’t call ourselves a CRO,” Stafford said. “I joined a statistical consulting company.”
Quintiles’ presence here – combined with the region’s major research universities, large drug companies such as GlaxoSmithKline, and an array of emerging biotech companies – proved to be a catalyst for the Triangle’s emergence as a CRO hub.
CRO executives sing the praises of the local labor pool, saying that the wealth of workers who have clinical research experience – either at a CRO or at local drug companies – is a boon to their business. Among other things, it enables them to minimize recruiting employees from elsewhere and paying for their moves.
When necessary, however, recruiting top talent from elsewhere isn’t a problem.
With all of the CROs that are here, prospective employees see “less risk,” Stafford said. The attitude is, “If I come to Quintiles and it really doesn’t work out, there’s lots of other opportunities.”
The obvious downside is that while you’re looking to poach the competition’s talent, they’re eyeing yours.
“What goes around comes around,” Williams said.
Michael Rosenberg, founder and CEO of Health Decisions, a CRO with 125 employees at its Durham headquarters, said local companies are focused on providing a good work environment because “you know an employee who is unhappy can walk down the street and do at least as well.”
Sam Taylor, president of the N.C. Biosciences Organization, a trade group for the life sciences industry, views the region’s top-level CROs as a major plus for startup pharmaceutical and biotechnology companies that are engaged in clinical trials.
“You can walk across the street or drive down the block and talk to your CRO instead of trying to work with them from … halfway across the country,” he said.
The strength of the local CRO industry also has spilled over into the academic arena – inspiring Campbell University and Durham Technical Community College to create clinical research programs in the late 1990s.
Meanwhile, the Triangle’s stature as a CRO industry hub continues to be a magnet for businesses.
Software company Clinverse was formed in 2008 in Charlotte, but from the outset the founders knew it wasn’t the right location for their business. The company’s cloud-based software, which it sells to CROs and to drug companies, automates the complex process of paying hospitals, physicians and research centers. The payments are based on the performance of a wide array of clinical-trial-related tasks, such as enrolling patients in trials and performing tests.
Moving to the Triangle “was always in our plans” in order to be close to a host of potential customers, said Steve Ayala, co-founder and president. He said the company also wanted to tap into a pool of labor software developers who “have an understanding of technology but also of the pharmaceutical industry.”
Clinverse moved to Raleigh in June 2010, before it started selling its software and when it had just a dozen employees, Ayala said. Today the company has 45 workers and projects that it could add 20 new hires in the next 12 months.
“We wish we would have done it sooner,” Ayala said of the move. “It’s absolutely brought all the benefits we thought it would.”
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