Why Contract Research Organization (CRO) is Vital for Your Company

Over the years, Contract Research Organization or simply, CRO has taken the biotech and pharmaceutical industry by storm. Every year more and more biotech companies continue to embrace and integrate CRO as a critical part of their drug research and development model to achieve the required result.

contract research organization

So what exactly is CRO, and why is it vital for any modern-day pharmaceutical company?

A Contract Research Organisation (CRO) refers to those types of companies that offer medical research services on a contract basis. The services usually offered by CRO can include –

  • Pharmaceutical development
  • Data entry and validation
  • Medicine and disease coding
  • Preclinical research
  • Statistical analysis
  • Clinical trials
  • Final study report, etc.

Premium CRO companies such as Novotech CRO offers a much more diverse library of services to assist your biotech or medical device company.

So, what is the need to outsource such third-party agencies, and why is it such a vital component?

To begin with, outsourcing a CRO company can reduce the total drug developmental cost and time by a substantial margin. If you have been in the biotech industry for a long time, you understand how these two critical factors can make a world of difference.  


For any drug developmental program to commence at full steam, substantial capital is of utmost importance. And, that is where the majority of small to medium-scale companies suffer. In most cases operating an in-house team to look after the task of drug research and clinical trials does not produce an ideal return of investment.

This is where the simplicity and convenience of CRO come into play. CRO companies reduce the overall cost of your drug development venture by streamlining the entire cost structure.

The cost reduction comes in three different forms –

  • Converting fixed cost to variable cost
  • Reducing employment cost
  • Reducing overhead cost

Variable cost

The concept of variable cost in itself is a much more suitable and cost-efficient structure, as opposed to its counterpart. So, instead of investing your limited capital on a fixed cost structure by employing an unequipped workforce, you can choose to implement a variable cost structure using CRO.

By outsourcing CRO companies, you can ensure cost flexibility by utilizing their resource and services only when you need it.

Employment cost

The cost of running an in-house research team includes a plethora of internal costs that can be daunting for any small to medium scale companies. Some of the internal components of labor costs include –

  • Income taxes (federal, state, and local)
  • Employee salaries
  • Benefit-cost
  • Maintenance and operation cost
  • Insurance cost

Typically with a proprietary Research Organisation system, all these cost elements are treated as individual entities. Thus, the final resultant cost is extremely substantial.

On the other hand, when you outsource a CRO, all the associated costs are included under one roof – hourly wage. This further simplifies the entire cost structure and reduces the overall capital investment by a significant degree.

Overhead Cost

The overhead cost can include a wide array of internal costs such as –

  • Sales and marketing cost
  • Human Resource cost
  • Facility cost
  • IT cost
  • Finance
  • Purchase cost
  • Accounting service
  • Legal services, etc.

Similar to the employment cost structure, CRO companies wrap all the necessary overhead costs under labor costs. This, in turn, decreases the overhead cost by quite a sizable amount.

In-house research organization systems can cost Biotech companies between 20% and 60% on overhead charges alone. CROs, on the other hand, can minimize the overall overhead charges by as low as 10% to 27%.

 Estimated time for completion of projects

Efficient time management is another vital aspect of outsourcing a CRO company.  With CRO, you are almost ensured of timely project completion, as opposed to relying on a team of unequipped workforce.

CRO companies have one crucial element that enables them to ensure quick and efficient execution – experience. The time window for completion of projects can be reduced significantly with the implementation of CROs.

Due to their impressive experience portfolio, CRO companies are able to transition from one complex process to another with ease. Starting from the initial project management phase to preclinical research and conducting clinical trials, CRO agencies execute all the necessary steps with minimal hindrance.             

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