March 1, 2008 (Vol. 28, No. 5)
Detailed Planning and In-Depth Evaluation of CROs Seen as Keys to Success
Clinical research organizations (CROs) may prove to be a lifeline for biopharmaceutical companies to bring new therapeutics to market faster, cheaper, and without affecting quality. Several factors are driving the increasing demand for outsourcing, such as frozen headcounts at pharmaceutical companies to contain costs, a dramatic increase in small- and mid-sized biotechs engaged in global clinical trials, and an increased pressure to bring more new drugs to market.
In fact, the growth rate of outsource spending by sponsor companies has outpaced the growth rate in overall global development spending—15% versus 11%, respectively—since 2001, according to a Tufts CDSS report. The same analysis also stated that in 2005, biopharma spent $6.6 billion on contract clinical services.
It is often difficult, however, for small or start-up companies to navigate the route to outsourcing; most are learning the ropes along the way. Some companies that will share their insights and strategies at the upcoming “17th Annual Partnerships with CROs and other Outsource Providers” conference in Las Vegas are highlighted in this article.
Outsourcing 101 will be covered by Kathleen Findlen, executive director of clinical operations at Syndax Pharmaceuticals. “This topic will give our audience some of the initial information they should think about when they are looking at an outsourcing strategy.” This is key for small, emerging companies like Syndax with limited budgets as well as personnel. Even with limited funds, the goal is to find a company that will develop a relationship early on with its A-team, in anticipation of the growth of the company.
The ideal situation, states Findlen, is to work with a provider who has multiple services. These providers, however, often have a large infrastructure, which reflects less flexibility. “I look for a company that will have the decision maker in the room so decisions can be made quickly. I try to encourage small companies to look for this as well,” notes Findlen.
She initially contracted with a full-service provider but subsequently switched to niche providers. “The administration and project management of clinical trials tends to be expensive to outsource, so I look for a balance of being able to handle some management in-house.”
It helps during initial discussions to request references, adds Findlen. “There are no protocols, and SOPs are not standardized, so there are no consistent rules and regulations for working together.” Furthermore, requesting not only proposals, but also proposal defenses has helped her to choose the right CROs.
Overall, the critical challenges for small companies include deciding what type of strategy to develop for outsourcing and understanding its implications, ensuring executive management is in agreement from an operation perspective, obtaining assistance from an outside group or network, and requesting references early to make sure choices are correct. “The key is to do your homework upfront. Also, don’t assume that because you’re outsourcing that you don’t need people in-house to manage it,” concludes Findlen.
Focusing on Specific Therapeutics
“The first step anyone should take if they don’t have an outsourcing group is to understand why they are outsourcing and what they are trying to achieve—whether it’s clinical horsepower to help with a study or regulatory work to help with data management. This helps structure vendor selection,” says Nicholas Kenny, Ph.D., executive director, oncology at INC Research.
“I’ve seen smaller companies overlook the fact that if you are going to build volume in a drug and then sell it versus building your company, the outsourcing approach is going to be different. If you are building the company, it’s more of a long-term strategic approach,” explains Dr. Kenny. Also, if a company has a unique area of development, it is key to find a CRO that has developed a product in that particular therapeutic area previously and understands the landscape, he adds.
In terms of comparing potential vendors, Dr. Kenny notes that most small companies his firm works with want to exchange confidentiality agreements and are forthcoming with their plans. This may be due to INC’s therapeutic focus (CNS, oncology, and infectious diseases) attracting early-phase companies, he says. “They tend to look to us to discover what they are missing in the timeline and what is feasible.”
The best way to compare vendors is to develop a solid request for information—a checklist of questions. Then, compare results and move to the RFP (request for proposal) process for cost comparisons. “The RFP process is more complex, unless you have the tools to develop it. Sometimes you have to rely on the CRO to provide a services checklist. Smaller companies have used our checklist to develop an RFP. It saves a lot of time.”
At the beginning of a study, the company provides a kickoff list that defines information flow and responsibilities at each level—a project management plan. “Without that in place, it’s really easy to get into a trial that you think is running smoothly and then you discover an issue that nobody knows how to resolve. The key is having the discipline to develop the tools and processes up front so when you get into a relationship it doesn’t fall apart,” Dr. Kenny explains.
Targeting Small Firms
United BioSource has developed an emerging company strategy to focus on smaller-sponsor companies. “We’ve made investments, specifically in program management and level of personnel (Ph.D.s and M.D.s), to be true partners with small companies that need a more nimble solution,” says Patrick Lindsay, evp and general manager, strategic clinical solutions. The company doesn’t consider itself a CRO but a pharmaceutical services organization, he says.
“We are predominantly known as a postapproval company but we also offer specialty services.” Some of these include clinical development services, patient recruitment, risk management, and FDA negotiation and support. “We offer our services in a segmented way but with the option of full integration, providing a more flexible focus for emerging companies and their needs.”
The key is to provide clients with frontline attention, says Lindsay, who adds that this has been an issue for years. “Large CROs have so many companies and projects going on that they often focus on their bigger customers. No one will ever admit that, but if you’re a smaller company, you may have already experienced this.”
One of the trends in drug development is the increased number of smaller companies trying to develop new entities. “They don’t have unlimited funds, so that’s where our company comes into the picture because we’re small enough to understand the entrepreneurial point of view. Our service needs to be premium because we cannot afford the mistakes of big companies.” Lindsay’s group tries to get detailed information on each customer’s preferences. “The focus is on the project, and what may have worked with one customer doesn’t necessarily work with another.”
There is much more focus now on having a strategy for choosing the right type of service providers and choosing the strategy that fits the situation appropriately, says Karen Zuklie, director of planning and outsource management at Purdue Pharma. “Outsourcing in the pharma industry is relatively new compared to other industries—really only over the past 15 years. Initially, companies took a tactical approach, but now it is now common to have dedicated outsourcing departments.”
Zuklie advises a company to have a good process with responsibilities clearly defined when developing a relationship with a CRO. “This includes everything from having SOPs to indicate how you oversee deliverables from the service provider to having outsourcing processes that decide your templates for RFPs to defining your escalation process.” In addition, early planning is key to a strong relationship, but it has to be nurtured.
One of the critical challenges with outsourcing is identifying the right balance of oversight when working with a service provider. “You want to have a level of oversight for hand offs of key deliverables that require your input but you need to know when to let CROs go and follow their set procedures for a successful outcome,” adds Zuklie.
Smaller companies must develop an outsourcing strategy based on the same premise as large companies. “It goes back to having a process to follow and having people responsible and accountable for the outsourcing,” she explains. “The key is to find a balance with a virtual partner.”
Mid-Size, Full-Service CROs
Celtic Pharma is a global equity fund that acquires clinical-stage compounds. “Our job is to develop and then sell them to a company that will handle the final stages of development and NDA filing,” explains Solomon Babani, director, outsourcing and vendor management. “Where we add value is that we are willing to take ownership at an earlier stage than the typical big pharma because it’s too risky for them.”
The company’s model is unique in that, as they acquire compounds, they set up an intellectual property company around each one. This company then contracts with Babani’s division, Celtic Pharma Development Services, which is responsible for the development strategy and advancement of that product. Since this is a small group, when they outsource a clinical trial, they are looking for a CRO to provide a much greater level of resources and attention than with a regular sponsor.
“We don’t have the internal workforce of larger companies. The companies we work with go through a paradigm shift in the way they approach a project. They are going to have to do everything for us. It poses, at times, a huge challenge for CROs,” states Babani.
His group only works with mid-sized, full-service CROs. “We’ve had better success with mid-sized CROs because they are more nimble.” Celtic Pharma looks for companies with creative thinking, along with the resources and focus for a specific project, explains Babani.
There are currently eight development programs in progress. The company plans to spend about 75% of it’s funding on development programs and most of that will be outsourcing dollars. “We expect to spend about $200 million in outsourcing annually over the next five years,” states Babani. “That’s on par with what a large pharma spends.”
Outsourcing will continue to grow in 2008 with an emphasis overseas, especially in Asia and India. The CRO industry is cyclical, says Rikki Bouchard, president and CEO of RH Bouchard & Assoc., an outsourcing management and consulting firm. “We are in an upturn, and outsourcing is no longer optional for most companies; it’s here to stay. It’s our job to continue to improve the methodology and best practices to create a more successful outsourcing experience for both the sponsor and the CRO.”