The consolidation of pharma is the elephant in the room; it’s not news that recent acquisitions have had global ramifications in the industry. The economic downturn and the need to reinvigorate the drug discovery pipeline have shaken out to a brave new work dynamic in which contract research organizations (CROs) play an increasingly important role.
The Association of Clinical Research Organizations estimates that CRO industry revenue will total $20 billion in 2010, representing about one-third of pharma and biotech R&D spending. At IIR’s “Partnerships in Clinical Trials” meeting held recently in Orlando, economic impact, lessons learned through collaboration, and some industry trends were among the topics discussed.
One of the trends of the last 5–10 years is R&D outsourcing; pharmas work outside of their company walls to move healthcare solutions through the clinic. Endo Pharmaceuticals, Astellas, and Daiichi Sankyo are three such companies.
“There are numerous benefits to establishing relationships with CROs,” noted Reinilde Heyrman, M.D., vp, clinical development and operations at Daiichi Sankyo. “Outsourcing critical functions like site selection, clinical site management, safety surveillance, IT support, compliance training, and even the implementation of electronic clinical trial technology solutions maximizes expertise, ensures flexibility, and can reduce costs.”
Daiichi Sankyo’s business model includes outsourcing noncore activities to CROs, when appropriate. For example, the company uses CROs for clinical site monitoring and global patient recruitment. “By using CROs, we can improve the R&D process to become more efficient,” said Dr. Heyrman. “The CRO model provides the most flexibility, as they help maximize expertise while minimizing internal resources.”
This model differs from the way big pharma does business, notes Deirdre BeVard, vp, clinical operations and data management at Endo. “We have a virtual to semivirtual approach that allows us to be flexible and to be able to exercise every option at any stage of development. For discovery, the virtual model is an advantage.”
“We have 10 scientists who oversee 150 scientists elsewhere. Our approach is to keep minimal infrastructure in-house and leverage the expertise and scalability of the CROs. In doing so, it allows us to diversify, to capitalize on opportunities to move projects forward through the clinic, and to get into devices and diagnostics.”
The global economy goes a long way to driving this model, noted Peter Carberry, M.D., svp and head of global development operations for Astellas. “More of the work is outsourced, and while certain competencies are still held within, I would like to see us go in the direction of a strong site quality approach, in that no matter where the resources are allocated internally or at a vendor, we can guarantee that all sites have the same quality of performance, and the same level of standards. The single most important thing is to never lose focus on the patients—we begin with quality data that leads to our ability to provide critical information used for the treatment of patients.”
“Industry has come a long way in working with CROs,” Kim McLean Boericke, global vp at i3 Research, noted. “Partnership used to be burdened with a ton of committees at all levels; project teams would be a sort of Noah’s ark, where for every one of a CRO’s personnel, there was a correlating team member. There was a lack of trust, but this was considered a good, effective model. However, you were double-paying for the same deliverable.”
CROs are now taking more of a robust role in drug development. “Pharma is definitely thinner; there are now one or two internal points of contact for the CRO to speak with about the projects. And the agencies are encouraged to be more creative,” said Boericke. “The ability for the partner to be flexible—creating hybrid models for supporting outsourced trials—is vital. CROs used to simply be a pair of hands, and now there is more of a synergy with the sponsor.”
From Boericke’s perspective, CROs have been driving change within the industry. “Where pharma has continued to consolidate projects into more complex trials, competition to win the transactional study has increased substantially.”
“A CRO gains the competitive edge by remodeling, reshaping, and rebounding the offerings it provides to the sponsor. More CROs are now capable of providing strong regulatory and compliance support, clinical development support, and execution and resourcing support—creatively and globally. CROs can provide a broad spectrum of ways in which to partner with a sponsor.”
Kendle is a full-service, global CRO that has a core competency in Phase I–IV clinical development. Simon Higginbotham, svp and chief marketing officer, noted that the industry faces a number of global challenges. “There is still room for continued improvement to get to higher level of efficiency and innovation across the clinical development process, and a charge to drive real improvements following declines in R&D spending in the global drug development enterprise versus historical benchmarks.
“What we’ve seen is a renewed drive toward outsourcing. Looking at new providers, seeing more collaboration, and increasing opportunities in the current clinical and economic conditions.”
Higginbotham explained that, although the economic situation has been challenging, in some ways, it’s been a boon to help pharma find better ways to manage costs. “As a multinational service provider, we have truly global access to patients and the expertise to conduct high-quality and cost-effective research all over the world, helping our customers to bring better drugs to market faster.
“Efficiency is a big word leveraging a global platform, and we are able to create this for our customers. Collaboration on a global scale and at a higher strategic level, plus validation of our quality in emerging markets—as demonstrated by our recent ISO 9001:2008 certification in China—leveraging some of those things helps us be a stronger partner to our customers.”
According to the “Tufts 2010 Outlook” prepared by the Tufts Center for the Study of Drug Development (Tufts CSDD), even as the number of companies with active clinical projects worldwide increased by 80% between 2000 and 2008, biotech and pharma firms held R&D headcounts to the same levels by working with CROs. The report notes that the increasing trend to work even closer, to improve R&D efficiency, is expected to continue as biopharmaceutical companies and CROs move away from traditional transactional relationships in favor of strategic alliances.
Tufts CSDD also reported that clinical trials conducted by CROs are completed an average of 30% more quickly than those conducted in-house. This results in an average time savings of some four to five months, translating to $120 million to $150 million in increased revenue potential.