2021 - Clinical Research Bounces Back

2021 is coming to a close and Covid is still playing havoc with our daily lives. Colleges are going virtual, sporting events cancelled and Covid tests are scarce. However, the clinical research industry experienced unprecedented growth and value creation during 2021. Hard to remember that during 2020:


  1. Clinical research sites shut down drastically reducing CRO monitoring revenue

  2. CROs implemented layoffs, furloughs and cost containment actions to minimize the impact of revenue reductions

  3. Business development activity slowed as virtual bid defenses were transforming into the new normal

  4. Industry uncertainty slowed mergers and acquisitions as CROs focused on stabilizing existing operations

2021 was a different story:

  1. Biotech funding shows no sign of slowing down

  2. A return to revenue and value growth

  3. Record breaking merger and acquisition activity

  4. A global labor shortage compounded by rising labor costs


Biotech Funding


I am continually asked when biotech investment will slow down - I'm not sure we will ever see biotech funding truly dry up. Investment trends continue to remain strong and the introduction of new technologies ensures we will see strong future funding. The chart below (from Evaluate) shows 2021 venture capital biopharma funding through Q3. Q1 2021 is off the charts - keep in mind that funding occurred during the winter months of the pandemic.

Quarterly Biopharma Venture Capital Funding

The chart below (from BioWorld) shows that overall biotech funding eclipsed $100 billion for the second year in a row. The trend lines in the top left hand corner are staggering. The trailing 20 year average is $35 billion while the 3 year average is $86 billion (almost triple). The expected trailing 2 year average is almost $130 billion. Hard to fathom that 1997 biotech funding was only $5 billion and 2021 investment is expected to be more than $120 billion.



1997 to 2021 Annual Biotech Investment Funding


Clinical Research Growth


I will get into CRO/clinical study growth in a minute. However, I found the data below to be a perfect example of how quickly the industry pivoted to deal with the Covid pandemic. The chart below shows study starts for studies with a coronavirus indication. Pretty amazing that we went from 84 study starts in the previous 5 years to over 6,000 coronavirus related studies in the last 2 years. The industry really stepped up to the Covid challenge.

Coronavirus Clinical Trial Study Starts

The chart below demonstrates the reduction of non-Covid study starts in 2020 and the bounce back in 2021. 13% of all study starts in 2020 were Covid related.


Clinical Trial Study Starts 2019 to 2021

The data table below shows how quickly the industry rebounded after 2020 as total new study starts are up almost 10% in 2021. A closer look at the data shows that non-Covid study starts are up 18.6% compared to 2020 (and 5% compared to 2019). Impressive considering vaccination rates were low (due to vaccine availability) the first 3-6 months of 2021.

Clinical Trial Growth 2019 - 2021

The graphic below ties together strong biotech funding along with new trial study start growth. Last year you may recall that Q2 was the most challenging quarter for all CROs as revenue declined due to pandemic related site closures. The chart below compares revenue for Q2 '21 and Q2 '20 for Syneos, Medpace, IQVIA, Labcorp Drug Development, ICON and PPD. While Q2 '20 revenue was "artificially" deflated due to the pandemic, industry growth rates have been fantastic. Q2 Year over year revenue growth ranged from 27% (Syneos) to 56% (PPD).


Syneos, Medpace, IQVIA, Labcorp, ICON, PPD Q2 '21 vs Q2 '20 Revenue Growth

Revenue was not the only metric to increase. The data table below shows pre-pandemic stock prices vs recent stock prices for several public CROs. All CROs listed increased over 65% - impressive as it is very difficult to grow share prices that rapidly for large companies such as IQVIA. Keep in mind, this growth is not on pandemic depressed prices during Q2 '20, but on pre-pandemic share prices. As an FYI, PPD & PRA were excluded from the data table as they no longer trade as independent public companies. Labcorp Drug Development is not an independent organization but a segment of Labcorp.


Ergomed, Medpace, IQVIA, Icon & Syneos Share Price Growth

Below tabulates overall shareholder value creation. The collective market capitalizations for Ergomed, Medpace, IQVIA, ICON and Syneos have increased $41.6 billion (or 75%) in the last two years.


Ergomed, Medpace, IQVIA, ICON & Syneos Market Capitalization Growth


Clinical Research Merger, Acquisition and Investment Activity


The latter part of 2020 had a few sizable CRO related transactions such as Syneos acquiring Synteract and Blackstone making a sizable investment into Precision for Medicine. 2021 had almost $40 billion of transaction value announced as we saw 3 large CROs (PPD, ICON & PRA) enter into strategic transactions. Clinical technology providers got into the mix as Bioclinica and ERT completed their previously announced merger.


  1. April 2021 - Thermo Fisher announces acquisition of PPD for $17.4B

  2. April 2021 - Bioclinica and ERT close their previously announced merger

  3. April 2021 - dMed and Clinipace merge to create the mid-size CRO with the largest Asia-Pacific presence with over 700 staff in China

  4. May 2021 - Premier Research acquires Camargo Pharmaceutical Services

  5. July 2021 - Icon announces a $12B acquisition of PRA Health Sciences

  6. July 2021 - Private equity firm EQT and the private equity business of Goldman Sachs Asset Management acquire Parexel for $8.5B

  7. July 2021 - Premier Research acquires Health Decisions



2021 Drug Development Mergers



Virtual Trials and Patient Recruitment Firms continue to expand and generate investor interest. This segment of the industry is very fragmented and rapidly evolving, below are just a few recent material transactions (and demonstration of recent value creation).


  1. September 2021 - Elligo Health acquires ClinEdge in a $135M transaction.

  2. October 2021 - Science 37 completes SPAC transaction with a public valuation of $1.3B

  3. October 2021 - Medable raises $300M+ at a $2.1B valuation


Labor Shortages


Drug development is not easy and while revenue and valuations are up so are job vacancies. The influx of capital creating demand for clinical trials has not increased industry capacity. We are experiencing a severe talent shortage - we simply do not have enough workers to satisfy current demand. Exasperating the issue is that biotechnology companies are recruiting from the same pool of candidates. I did a search on LinkedIn for "Clinical Research" jobs in EMEA, Unites States, Latin America and APAC - almost 49,000 positions being recruited.



CRO Jobs Opportunities

The talent shortage is causing a robust "War for Talent" driving up labor costs across the industry. The end result is higher compensation for employees increasing the overall cost of running a clinical trial. Increasing clinical trial costs could be the headwind that momentarily decreases biotech funding as the economics of running a clinical trial change.


Wrapping Up


The drug development industry has been on a two year rollercoaster. CROs navigated declining revenue, layoffs and uncertainty to robust growth and challenging recruitment. The Covid pandemic is still causing headaches in many industries (i.e. travel, entertainment, restaurants, etc...) but CROs were designed to survive the Covid threat. Employee decentralization and working from home was already an industry norm. Plus the drug development is to advance science and improve overall healthcare outcomes. I would say with the rapid deployment of multiple Covid vaccines, Covid related therapeutics and the continuation of non-Covid related research the industry hit the mark (and then some). Wishing everyone a safe and healthy holiday season!


Jason Monteleone joined Clinipace as CEO in October 2017, bringing extensive expertise in the midsized clinical research organization (CRO) sector. A recognized health care and life science leader with more than 20 years of experience, he accepted the role as CEO after several months of strategic consulting with the company. Under Jason's leadership, Clinipace merged with dMed, a China based CRO, creating the mid-size CRO with the largest Asia-Pacific presence. Prior to Clinipace, Monteleone founded Pivotal Financial Consulting LLC, was Executive Vice President and Chief Financial Officer of Theorem Clinical Research, was Chief Financial Officer of Omnicare Clinical Research and held executive finance positions at MDS Pharma Services and VIASYS Healthcare. Jason can be reached at jmonteleone@clinipace.com, jmonteleone@pvtfinance.com. Follow me on Twitter @JMPivotal and sign up for Jason's latest blogs and updates at www.pivotalfinancialconsulting.com.