VCCircle

If the Indian pharma industry is said to be ripe for consolidation (think Ranbaxy's sellout to Daiichi Sankyo), then the clinical research segment is set to witness so deals too. A few firms which are engaged in contract research for development of new medicines, clinical trials of medicines in human beings, pre-clinical studies and animal testing are said to be looking for buyers, according to a report. While there are two such clinical research organisations (CROs) based in Mumbai and another two in Hyderabad which are on the block, there are many others in the pipeline.
Besides, some of the bigger CROs are looking at mergers with other large players to gain size. Large players in the segment include Quintiles Spectral, Clinigene, SIRO Clinpharm, Lambda Therapeutics besides Reliance Clinical, among others.
The CROs which are up for sale have small size with revenues ranging between $1 to $2 million. The industry itself is in a nascent stage with overall size pegged at around $250 million.
The consolidation in the industry is linked to widespread mushrooming of CROs in the country over the last five years. There are more than 100 CROs in India today as against just about 20 players in FY'05.
This inturn was due to global interest in testing medicines on a diverse group of Indian population at much lower costs. These CROs are also facing acute shortage of skilled staff, with very few institutes in India today being able to train clinical professionals.

Moreover, regulations are getting tighter, both in India and abroad which is leading to a push for consolidation. Other firms who jumped on to the bandwagon without getting their business basics right are also facing problems.