Navigating the Biotech Funding Surge: Key Opportunities for CROs

The biotech industry has seen a dramatic shift in funding patterns, particularly in the seed and Series A stages. Early-stage biotechs focused on novel therapeutic modalities are raising significant capital, with Series A funding rounds averaging $94M in 2024—an increase from $60M in 2023 and $65M in 2022. However, the bulk of venture capital investment remains directed toward companies in clinical or late discovery phases, where the perceived risks are lower and the timelines to market are shorter.

This environment presents a unique opportunity for Contract Research Organizations (CROs) to redefine their value proposition by enhancing their offerings, embracing advanced technologies, and becoming indispensable partners to biotech startups.

Biotech Funding Trends and Their Impact

Over the past three years, early-stage biotech funding has grown steadily, with $100M Series A rounds becoming increasingly common. Startups are securing larger rounds to ensure longer cash runways, enabling them to progress through critical milestones without frequent fundraising. While the increase in funding is promising, investors are prioritizing companies with clear clinical paths or robust preclinical data, leaving discovery-phase startups with significant pressure to de-risk their programs quickly.

For CROs, this trend underscores the need to support biotechs in reaching these milestones efficiently by offering integrated solutions that combine innovation, expertise, and scalability.

CROs: Adapting to a New Biotech Landscape

CROs are poised to play a pivotal role in this evolving ecosystem. To remain competitive and relevant, CROs must:

• Strengthen Preclinical Infrastructure: CROs must focus on selecting drug-like candidates and expediting IND-enabling studies. By offering specialized platforms for translational research, including animal imaging, CROs can ensure that biotechs have a clear path from discovery to clinical trials. Preclinical animal models, coupled with imaging tools like PET scans and MRI, provide invaluable insights into biodistribution, pharmacokinetics, and tumor targeting that are critical for progressing to human clinical trials.
• Leverage Advanced Therapeutic Modalities: Incorporate capabilities for next-generation therapeutic approaches, including:
• Embrace AI-Augmented Tools: AI and machine learning can streamline lead optimization, predict toxicity, and accelerate drug design, making the drug development process faster and more cost-effective. AI-driven tools can help analyze complex data sets, improve target identification, and enhance drug development timelines.
• Humanized Models for Translation: Develop primary and humanized cell models to enhance preclinical predictions, increasing the likelihood of clinical success. Humanized mouse models, in particular, are key for studying immune responses, drug metabolism, and toxicity in a more clinically relevant environment.
• Comprehensive IND-Enabling Services: Provide toxicology, biodistribution, pharmacokinetics (PK), and pharmacodynamics (PD) studies along with regulatory expertise to facilitate IND filings.

Investor ROI and CRO Value Proposition

While the article discusses what CROs should do, it’s equally important to explore how these investments can translate into tangible benefits for both CROs and biotech companies. By investing in cutting-edge platforms, CROs can ensure that biotech startups successfully navigate the development process, moving quickly and efficiently through preclinical phases.

For CROs, the return on investment (ROI) is evident in their ability to position themselves as essential partners for biotech firms. Enhanced preclinical capabilities and access to advanced drug delivery systems, coupled with integrated services, enable CROs to offer more value, which in turn can lead to long-term contracts and increased revenue streams.

Strengthening Preclinical Infrastructure: How CROs Add Value

CROs that focus on strengthening their preclinical infrastructure are well-positioned to help biotech companies reduce the risk associated with early-stage development. The ability to offer robust data on drug candidates—through in vitro assays, animal studies, and predictive models—enables biotechs to advance more confidently toward clinical trials.

For example, Charles River Laboratories has been a leader in offering integrated preclinical services, including toxicology studies, pharmacokinetics, and regulatory support. Their platform helps biotechs de-risk their projects and prepare for IND filings with greater certainty.

Additionally, by incorporating humanized models and AI-driven optimization platforms, CROs can significantly reduce the failure rate of preclinical studies, ensuring that only the most promising drug candidates move forward. These advances in infrastructure and technology ultimately lead to quicker, more reliable IND submissions, resulting in faster market entry for therapeutic candidates.

CROs as Strategic Allies: Aryastha Life Sciences' Approach

As one of the leading Contract Research Organizations (CROs) based in India, Aryastha Life Sciences stands out as a premier Translational Research Organization (TRO). With a team of elite scientists and a focus on cutting-edge technologies, Aryastha is well-equipped to support early-stage biotech companies throughout the drug development process. By offering a comprehensive suite of services—from preclinical studies to IND-enabling services - Aryastha is strategically positioned to help biotechs bring their innovations to market more efficiently.

Aryastha's unique capabilities lie in their ability to combine conventional drug discovery approaches with advanced tools such as oligonucleotide chemistry, bio-conjugation, and AI-augmented drug design. Their strong focus on humanized models and cell-directed delivery platforms positions them to offer biotechs the precision and expertise needed to reduce risks and optimize therapeutic outcomes. In this rapidly evolving landscape, Aryastha is committed to staying at the forefront of technology, ensuring that its biotech clients can accelerate their timelines and deliver novel therapies to patients faster.

Market Dynamics: CROs as Strategic Allies in Biotech Success

The reliance on external service providers is becoming a growing trend in biotech. As companies adopt leaner internal teams, CROs must position themselves as strategic partners, offering not just services, but integrated solutions that span the entire drug development pipeline. The ability to scale services—whether it’s early discovery, preclinical studies, or clinical trial management—is crucial for maintaining strong, long-term relationships with biotech clients.

CROs as Catalysts for Biotech Success

As biotech funding continues to rise and more capital flows into early-stage companies, the role of CROs becomes more vital than ever. Biotechs, particularly those in the early stages of development, face increasing pressure to deliver results while managing limited resources. CROs that invest in advanced technologies—AI, humanized models, and drug delivery systems—are uniquely positioned to help biotechs meet these challenges and accelerate their paths to clinical trials.

By strengthening their preclinical infrastructure, expanding their service offerings, and adopting innovative approaches, CROs can not only attract more biotech clients but also contribute directly to the success of novel therapeutics.

References:

• PitchBook. Biotech Investment Trends: Series A Funding and Growth in 2024. PitchBook Data, Inc. https://pitchbook.com
• CB Insights. Venture Capital Investment in Biotech: Key Drivers and Market Dynamics. CB Insights. https://www.cbinsights.com
• MarketsandMarkets. Contract Research Organization (CRO) Services Market - Global Forecast to 2025. MarketsandMarkets. https://www.marketsandmarkets.com
• Science Translational Medicine. The Impact of Artificial Intelligence in Drug Discovery: Current and Future Perspectives. Science Translational Medicine, 2023. DOI: 10.1126/scitranslmed.abg0495
• Journal of Drug Development. The Role of CROs in Accelerating Preclinical Development and IND Filings. Journal of Drug Development, 2022; 48(7): 275-284. DOI: 10.1016/j.jdd.2022.04.007