Eastern Europe Emerges as New Hub of Low-Cost Clinical Trials, Beckons Contract Research Organisations

PALO ALTO, Calif.--(BUSINESS WIRE)--Oct. 27, 2003--The $2.60 billion European contract research organisations (CRO)
market trails its $4.18 billion U.S. counterpart. Overall reductions in R&D expenditures due to the soft global economy
and continuing price control are set to stifle preclinical research in Western Europe. However, strong annual growth is
still forecast as Eastern Europe offers a beneficial climate to conduct low-cost clinical trials.

Stricter price control measures by governments in Western Europe have reduced revenue flows to pharmaceutical
companies, compelling them to cut back on R&D expenditures. At the same time, tighter reimbursement policies have
discouraged the use of expensive, new drugs while lowering the quality of patient care.

Efforts to remedy this situation are unlikely to succeed due to the ongoing cocktail of soft economies, dwindling
government funds, and spiraling drug costs. In this scenario, preclinical research has been negatively impacted.

"As this phase of the drug development process is cost-intensive, relying on sophisticated science and expensive
testing equipment and facilities, developers are reluctant to commit to high capital expenditures when revenues are
relatively stagnant," explains Frost & Sullivan research analyst Alison Sahoo.

Also, since preclinical testing needs to be located in proximity to central development efforts, US pharmaceuticals are
unlikely to outsource such work to Western European CROs. Instead, only European pharmaceuticals and biotechnology
companies are expected to employ local CROs for preclinical projects to support their R&D teams. This is in contrast to
the trend of outsourcing clinical work to Eastern European CROs.

Ms. Sahoo states, "Clinical trials, the bulk of whose cost is related to patient compensation, have increasingly grown
more expensive in Western Europe. This is pushing clinical development that would otherwise be conducted in Western
Europe into Eastern Europe. Compensation of Western European volunteers and medical personnel is now similar to US
rates."

"Additionally, trial centres in the region routinely charge for all expenses incurred while their Eastern European
counterparts bill only for costs incurred over and above standard operating expenses," Ms. Sahoo comments.

Despite this, clinical development is likely to persist in Western Europe. Linguistic and cultural similarities with
the U.S., qualified physicians and proven quality of trial centres are likely to underpin Western Europe's continued
relevance in the market for outsourced clinical research.

In comparison, Eastern European clinical CROs are becoming an increasingly attractive proposition for drug developers
in both the U.S. and Western Europe. Among the obvious, advantages of the region are low costs of patient reimbursement
and the presence of highly skilled medical staff.

This has been reinforced by centralised healthcare systems. Sizeable, homogenous populations having similar racial
characteristics to the United States, have, in addition, facilitated patient recruitment drives. This has been aided by
traditionally high compliance with study protocols. Patients in this region tend to be relatively under medicated, thus
reducing the risk of patients using competing medications and compromising the integrity of the final data. The high-
quality data obtained has helped accelerate the process of securing regulatory approval.

The first wave of east European countries that profited from the trend toward outsourcing clinical work includes
Poland, Hungary, Russia, and the Czech Republic. Now, lured by the prospect of even greater savings, CROs are looking
to establish facilities in Russia, Bulgaria, Romania, and Serbia as well. Russia, in particular, represents an untapped
market with vast potential.

However, entry barriers in Eastern Europe are relatively high. Many CROs, mainly the smaller firms, have chosen to
partner with established providers in these regions rather than install their own facilities.

The European CRO market is forecast to grow at a CAGR of 10.4 percent to an estimated $4.26 billion in 2007. Quintiles
followed by Covance, PPDI, and Ingenix dominate the current market based on their entrenched pan-European operations
and their range of full-service offerings encompassing preclinical, clinical, and commercialisation services.
Competition is set to intensify as new participants enter this lucrative market.

"While many of the competitive factors in Europe are similar to those in the U.S. and Asia, particularly a firm's
ability to deliver top-quality data within ever-shorter periods of time and at lower costs, Europe's unique
multicultural geography creates several other key points of differentiation," warns Ms. Sahoo.

"Firms with a wide geographical reach and the resources to navigate different languages, business cultures, and
regulatory regimes, will have an advantage over those that can operate in just one or two jurisdictions," she
concludes.

Frost & Sullivan, an international consultancy firm, has been supporting clients' growth for over four decades. Our
market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include strategic
consultancy, market intelligence and management training. Our mission is to work with our clients' management teams to
deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network
of more than 500 consultants, industry experts, corporate trainers and support staff, spans the globe with 19 offices
worldwide.

World Contract Research Organisations Markets is part of the Pharmaceuticals Monitor Service, which includes market
insights on U.S. Parkinson's Disease Therapies Markets and U.S. Emerging Transdermal Drug Delivery Technologies
Markets. Interviews are available to the press. World Contract Research Organisations Markets A547

Contacts:

Frost & Sullivan
Europe:
Katja Feick, +44 (0) 20 7915 7856
[log in to unmask]

or

Americas:
Danielle White, 210-247-2403
[log in to unmask]

or

India:
Biswarup Banerjee, +91-44-24314263/5/6/7
[log in to unmask]

SOURCE: Business Wire (press release)
http://tinyurl.com/smow

* * *

----------------------------------------------------------------------
To sign-off Parkinsn send a message to: mailto:[log in to unmask]
In the body of the message put: signoff parkinsn