The current "elephant in the room" in the biotechnology and pharmaceutical industry is the fact that drug pipelines are suffering severely, resulting in a 20% decrease in Investigational New Drug (IND) filings just in the last two years. This is a vicious cycle, as it results downsizing of early R & D, causing many pharmas to lose drug discovery capabilities. However, they can now outsource to their choice of more than 500 contract research organizations (CROs) with wide-ranging clinical and pre-clinical capabilities. Indeed, several CROs have been a direct result of pharma downsizing, as displaced researchers take their specialties and form small companies, often doing quite well. A recent study came out about CROs, indicating that business is booming, with a 12.6% compounded growth rate in the market through 2011, when it will be $29.4 billion. CROs also allow smaller biotech companies to perform drug discovery more easily, allowing them to utilize capabilities only when needed in the development of their candidates. In some cases, such as CHDI, Inc., in Los Angeles, biotech companies don't have any internal capabilities at all, doing so-called "virtual" drug discovery. An interesting trend that benefits both CROs and pharma companies is the globalization of CROs. For the CROs, much business can be found in markets such as China and India, where both clinical and pre-clinical research is growing rapidly. Pharma companies benefit from globalization since US full-time equivalent (FTE) rates are high, especially in the biotech hubs. The first "stage" of globalization was the utilization of CROs which were wholly based overseas. However, it was found that sometimes this outsourcing suffered due to the intensive communication and project management needs of drug discovery programs. Now, CROs are becoming more globalized in the sense that while FTE work may be done where the rates are lower, there are strong ties to US or European sites. BioBlocks, a pre-clinical CRO specializing in chemistry services for lead optimization, recently announced a significant expansion of their management team, with senior members at their sites in San Diego, California, and Hungary. BioBlocks keeps it close ties to US drug discovery advancements and has strong project management at both sites, facilitating communication and performing the chemistry with non-US FTE rates. What will the globalization of CROs mean for drug pipelines? Hopefully, this "new generation" of CROs will mean more capital efficiency and success for IND's. Perhaps the utilization of these new CROs by smaller biotechs and pharma alike will minimize financial risks and result in more novel, first in class therapeutics for indications that are currently underrepresented in the market. --Mary Canady, Comprendia, LLC.