Fred Eshelman

COURTESY OF PPD

In 1985, Fred Eshelman took a gigantic risk. He left Glaxo, now part of GlaxoSmithKline, where he'd served as senior vice president of development and vice president of clinical operations, to go home - literally. Working in a home office, he started a one-person consulting firm called PPD. This contract research organization (CRO) grew rapidly. Over the years, Eshelman guided the company to become one of North Carolina's top five CROs. Today, PPD employs 9,100 employees in offices in 28 countries.

"PPD is kind of different from other CROs on the same level, since they tend to work more closely on projects with partners and share a certain level of risk," says Barath Shankar, pharmaceuticals and biotechnology analyst at research firm Frost and Sullivan. "They might share the profits off a compound, or if it's sold off, might get a payoff from it."

Indeed, a collection of CROs in North Carolina gained economic success, and these companies also deliver success to their clients. The CROs help biotechnology and pharmaceutical companies bring drugs to market by developing and formulating drugs, administering clinical trials, processing samples, managing and analyzing data, and so on. Roughly 30 CROs base their operations in North Carolina, and some 60 from other states also provide benefits to North Carolina industries. All together, these CROs employ an estimated 15,000 to 20,000 people.

North Carolina's top two CROs also make the world's top-five list. Durham-based Quintiles is the state's top CRO in terms of total revenues at more than $1.87 billion in 2005, according to pharmaceutical and biotech research firm Thomson CenterWatch. In 1974, this company grew out of statistical consulting and data-management services that Quintiles founder and chairman Dennis Gillings provided to pharmaceutical clients during his tenure as a biostatistician at the University of North Carolina at Chapel Hill. Quintiles now employs 16,000 worldwide, with offices in more than 50 countries. Last November, the company announced that it will create another 1,000 jobs in North Carolina in the next six years.

In assessing Quintiles, Shankar says, "On a global level, they are one of the fast growing CROs." He adds, "They were one of the pioneers in outsourcing clinical research in areas like Asia and Eastern Europe."

Constella Group comes in as North Carolina's second-largest CRO. Also based in Durham, this CRO emerged from statistical consulting work and information-technology services that founders Donald Holzworth and Steven Seilkop provided for life-science clients. In the past five years, Constella Group grew dramatically, from roughly 150 employees to about 1,300 and from $30 million in annual revenues to an anticipated $200 million in 2007, according to Holzworth.

"The company grew in the first 12 years primarily through relationships with federal agencies such as the NIH, EPA, and CDC," Holzworth recalls. "In 1995, we began looking more seriously at the pharma industry as a great place to take our services, and so we grew there slowly through the 1990s."

In the 2000s, Constella Group started an acquisition strategy to fill out their portfolio, "and over the last six years has acquired six companies, three of which are in the CRO space. Today, that's the most rapidly growing part of our business," Holzworth says.

Dennis Gillings

COURTESY OF QUINTILES

Beyond Durham, other North Carolina cities also host successful CROs. Raleigh, for example, is home to INC Research. This company started at the University of Virginia at Charlottesville, which hosted several head-injury and cerebrovascular studies. INC Research emerged in 1998 when the Neuroclinical Trials Center, which incorporated the university's brain injury research program, joined forces with Integrated Neuroscience Consortium, a site-management organization focused on the central nervous system. Although INC Research originally focused on research related to the central nervous system, it branched out into oncology, pediatrics, and infectious disease. In the past five years, INC Research grew from a roughly 150-employee company to a 1,000-person firm, with revenues increasing from $20 million to more than $80 million in that time.

"When we began, our bread and butter as a CRO was in the biotech space. That's a very different world from pharma," says Ty Quinn, INC Research's senior vice president for business development. "Biotechs look for a more collaborative approach with vendors and look for guidance." Nonetheless, he adds, "In late 2005, our business took a shift from biotech to predominantly pharma, but we're not losing sight of our biotech roots and how to be responsive." In addition, INC's acquisition of Vujaklija, the first CRO in Central and Eastern Europe, made them a global company. INC also plans to grow relationships in South America and Asia, specifically Japan and India, Quinn says.

"Most CROs in North Carolina are like INC or smaller, not on the scale of Quintiles or PPD," says Fred Smith, vice president at pharmaceutical and biotech consulting firm PharmSupport in Research Triangle Park. "At the same time, Quintiles and PPD are seen kind of like big, impersonal monoliths," says Chandra Louise, president at PharmSupport. "There is a perception [that] you get more personal service from some of the smaller CROs."

INC Research Headquarters

COURTESY OF QUINTILES

Although not a CRO per se, Duke Clinical Research Institute (DCRI) also accepts contracts. "On average, we have roughly 55% of our contracts from companies, and 45% not from companies, funded by the NIH," says DCRI director of communications, Patricia Hodgson.

DCRI grew out of Duke University's pioneering research into cardiovascular health, with the Duke Databank for Cardiovascular Disease, started in 1969, being the largest of its kind in the world. After more than a decade of observational studies, the database's founders began coordinating multisite clinical trials. Moreover, DCRI publishes its findings. "CROs typically don't publish, just handing data over to the sponsor," Hodgson says.

Regardless of whether support arises from a home office or a university, CROs add a valuable dimension to North Carolina's biotechnology industry. Rather than needing the capability of handling every detail, companies can turn to CROs for the needed expertise.