Question-and-Answer Session
Operator
(Operator Instructions). We'll take our first question today from Mr. Greg Bolan with Wells Fargo.
Greg Bolan - Wells Fargo
Just thinking about Early Development activity these days and I realize this is an overly simplistic analogy, but it would appear to me that pharma has been fasting for a while now and need to consume in order a sustained life over the coming years. Joe, just thinking about outsource Early Development services as we lap the integration periods for pharm M&A deals, can you offer any color on outsourcing appetites for preclinical through clin pharm among biopharma exacts going into next year?
Joe Herring
Well, Greg, as I mentioned, having six companies tied up in mergers is unprecedented, and so I think those companies, clearly, are going to come out of that and need to advance their pipelines. So I think that is a very significant factor. I also think that right now and over the next six to nine months, there are more decisions being made on fixed cost infrastructure in the pharmaceutical industry, at least as it relates to R&D, than any time that I can ever remember.
So I think sitting here today, it's difficult to call with certainty, but our belief is that outsourcing is going to accelerate. Keep in mind, 11 companies generate 50% of all R&D spend in this industry, and so to have six tied up, it is very significant. As they come out the other side, we think some big decisions are going to be made.
Bill Klitgaard
Greg, it's Bill. I just want to make one other comment. I like your thought about pharma fasting and I think it's clear that in the longer run, the pharma companies need to continue to invest in new molecule development and therefore the demand for Early Development services will be there in the long run.
Greg Bolan - Wells Fargo
Then just a quick follow-up. Joe, can you touch a little bit more on clin pharm this quarter? I mean, if I recall back on the second quarter call, clearly clin pharm had improved during the quarter. Just can you help me understand just the current dynamic there and any more color you can give in terms of the reasons for the extreme lumpiness, obviously knowing that this business is inherently lumpy?
Joe Herring
Lumpy is the word and I guess I'd stitch it to unpredictable. Again, we had a much better clin pharm picture three-four months ago. There is no real trend here. There is a little bit of molecule failures. There is a little bit of delaying of portfolio decision of the client organization. It all sort of stacked right on top of each other and came in a very sharp, short period of time and is breathtaking. Again that will carry forward into the fourth quarter. As we have said before and the reason why we invest and you see other companies investing in Phase I in clinical pharmacology, it is that it's a very strategic point in the drug process. So I really can't give you much more color than that.
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