Clinical trials or clinical research trials are a huge process by which pharmaceutical companies study the effects of a new drug or a new therapy in order to collect safety and efficacy data. Based on those data, the FDA or other government organizations in other countries will decide to approve the new drug /therapy or not. Because of its nature, clinical trials are extremely lengthy and costly, and the challenge to bring a new drug to the market is extremely big, even for the big and experienced pharmaceutical companies or biotech companies.

Recession have been defined by many economist, as a necessary part of our economy. Recessions allow us to redesign our economy, but especially to allow the “fittest” companies to survive, grow. Almost always immune to economic recessions and crisis, the healthcare industry is showing this time ¸signs of weakening and faces severe pressure. And with today’s recession going bad to worst, the worst is to come for the big pharma and biotech companies. Is the clinical trial industry globally ready to face it? What strategies will allow the clinical trial industry to survive the recession?

First, the industry will have (and have started) to reduce the workforce. Investors are more cautious with their investments and less likely to put money into risky drug development. Sponsors are cutting back on their budgets, less important studies will put aside, while the most important studies will see an abrupt cutback on how much money they receive. Therefore, the number of healthcare professionals needed for the industry will be reduced, leading to layoffs of healthcare professionals.

Second, many sponsors will move their work offshore, to other countries. Outsourcing to countries such as China, India, Eastern European countries is now often the key for many biotech and pharmaceutical companies to fight the effects of today’s economic recession. Hence, the value of work outsourced by countries such as the US to other countries can be up to over 40 per cent less.

Third, the clinical trial industry is getting computerized, to fight the effects of the economic turndown. The emergence of technologies has lead to an increase in the number of clinical trial software available. These clinical trial software allow for an increase efficiency in the management of clinical trial data and a reduced cost. Therefore, globally, the clinical trial industry will need to modernize the way of managing data in order to reduce the cost of processing and analyzing huge amounts of data.

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Finally, although economic recessions are difficult to live through, the clinical trials industry can survive the crisis if it wisely consider and adopt new working strategies to reduce the cost, but also to increase the efficiency of work and its workforce.

The pharmaceutical and health-care industry have historically been relatively immune to economic turndowns, because illness doesn’t take a vacation. Yet, with the ongoing recession, financial support will be reduced. Therefore, like in other industries, it is expected that the most affected by the reduced availability in funding will be the early stage biotech and pharmaceutical companies who need funding. But is there more to come?

There are a few possible speculations.

1. There is a possibility that things will get worst due to the fact that the market will be so uncertain that no financial investors will be willing to back up any company with a risky profile, notably in regards to the early or short term investments. In the event of this scenario, all industries will be affected. Companies with little cash will go one by one, until the economy heals.

2. Investors are often reluctant to put their money into biotech and pharmaceutical companies because of other very attractive industries such as buyouts and investments in resources (mines, oil). As the economic crisis goes on, the opportunities for capital will decline further. Because of the known and well recorded risk profile of the biotech and pharmaceutical industry, investors are going to stay away and put their assets in sectors with none to low risks. However, exit routes also play an important role. Unless there is a fast return, there is only one way for a biotech/pharma company to be profitable: through acquisition by a larger biotech or pharmaceutical company. Because of the way biotech and pharmaceutical companies usually grow, this is highly likely to happen. In this scenario, smaller companies, unable to sustain their finance could potentially ask bigger biotech/pharma company to bankroll them, allowing the industry to survive and even grow.

As a matter of fact, that second hypothesis has already started to take place. With today’s economic turndowns, big drug companies are on a shopping spree. With the stock market prices tumbling, acquisitions are becoming cheaper. Also, struggling to find loans and capital, smaller companies are now more enticed to turn to the bigger ones to survive. Many big pharma companies, such as Bristol-Myers, GlaxoSmithKline or Wyeth, have been staring down billions worth of drug-patent expirations and many of them have few up-and-coming drugs to fill the blank. This economic crisis has given them exceptional opportunities to find bargains amongst the unfortunate small to medium companies in need for funding.

Nonetheless, it is important to remember that although the recession has yield great merges and acquisitions by the bigger biotech/pharma companies, the biotech and pharmaceutical industry is also very affected by the economic slowdown, and many of them are cutting jobs and closing factories. The belief of pharmaceutical and the health-care industry immunity to economic turndown is now on hold, and so is the hope for new medicine breakthrough.

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