In the past, pharmaceutical and biotechnology companies were known for discovering and developing their own drugs and devices – designing, testing and eventually bringing products to the market for mass consumption. But in more recent decades these companies have increasingly turned to a new group of players to perform services on their behalf: contract research organisations (CROs).
By promising to make operations faster and leaner while simultaneously offering a higher success rate, CROs that specialise in services as diverse as medical writing, data analysis and managing regulatory affairs have become an essential part of the clinical trials landscape.
A wider reach
With larger pharmaceutical companies continuing to downsize and smaller firms lacking clinical experience, it is a role that continues to expand. According to a 2018 report by Grand View Research, the global CRO market is expected to reach $51.3 billion by 2024, with a CAGR of more than 6% from 2015 to 2022.
The report cites North America as the largest CRO market due to the number of trials undertaken and outsourced, with considerable support from the US Government for different R&D activities. Asia-Pacific is cited as the fastest-growing region thanks to its diverse population, and ability to recruit and retain patients for trials with relative ease.
“The key reasons for the rapid growth include increasing investment in R&D programmes, preference to outsourcing activities due to time and cost-efficiency, and patent expiration,” says the report. “The contract research outsourcing collaborations offer cutting-edge services, and thus government organisations prefer assigning projects to the CROs.”
As the CRO industry grows, it is undergoing a number of important structural changes. First, it is having to cater to new clinical services in the fields of technology, patient services and regulatory affairs, where expertise is particularly important to help reduce costs and guarantee approvals.
Second, in recent years the largest CRO organisations have embarked on projects of aggressive consolidation. The industry’s top ten players now account for around 60% of the entire market and are gradually squeezing out smaller companies by offering as large a range of services as possible.
Third, large CROs are now pursuing bold new strategies designed to enhance their competitiveness. According to an article by Ken Getz from the Tufts Center for the Study of Drug Development (Tufts CSDD), a number of major CROs have taken the step of physically acquiring investigative sites and site networks. This can be seen in PPD’s 2015 acquisition of Clinical Research Advantage and 2016 purchase of Synexus, the world’s largest global site-management organisation.
Close to home
CROs have also been trying to get much closer to patient data in an attempt to improve their ability to recruit and retain people for studies – a common thorn in the side of the clinical trials industry. In January, for example, multinational company Parexel announced a new partnership with Optum, an information and technology-enabled health services business. The alliance will see the CRO gain access to data on roughly 35 million patients.
“Leading CROs are aggressively seeking game-changing strategies to enhance their relevance, secure competitive advantage and measurably impact sponsor-company development performance,” says Getz.
As well as forcing CROs to evolve, increasing regulatory pressure and commercial competition are driving sponsors to evaluate which outsourcing models will help push their clinical trials forward. Over the past few years two models have emerged at the forefront: full-service outsourcing and the functional service provider (FSP) model.
Going all in
As its name suggests, the former involves sponsors outsourcing entire clinical trials or programmes to CROs that are considered capable of providing all the functional services required.
It is a classic tried-and-tested approach that enables vendors to leverage their own systems in a cost-efficient fashion.
“Full-service outsourcing provides the benefits of access to scale and less complex management versus the use of multiple providers that have to interface with each other,” say Lina Cohen and Allie Young, researchers at Gartner and authors of the book Multisourcing.
But the approach can encounter problems. In many cases, sponsors report feeling stuck with a single service provider that may not be performing adequately in certain areas. Duplication of roles is often reported, with both parties engaging in oversight and strategic decision-making – and neither quite sure who is really in charge.
Over the years, these limitations have led to a surge in interest in FSP-based outsourcing – an ‘a la carte’ model in which vendors provide specific functions of a clinical trial such as monitoring, site management and bio-statistics. The contract terms of this model are usually focused on the service being delivered rather than the time and effort required.
Fit for purpose
The FSP model is often considered a more flexible approach to outsourcing. Instead of using one company to perform all services, sponsors can instead pick the most suitable service provider for each individual area.
“When working under a FSP model, a sponsor company can pick and choose among the best-in-class service providers to find the expertise needed for their therapeutic area,” says Lisa Henry, senior manager of clinical research at the medical device company Cordis, for clinicaltrialsarena.com.
The model also allows sponsors to retain wider control over product delivery – something that is not possible when an entire clinical study is outsourced. This helps to avoid the pitfalls associated with full-service arrangements, when attempts at oversight end up producing wasteful levels of duplication.
But FSP models are certainly not perfect. They are not considered as mature as full-service arrangements and therefore lack the same level of understanding within the industry. Having multiple vendors delivering different services can also be difficult to manage and potentially result in an increase in costs.
“Each provider will need to incur costs associated with familiarising themselves with the project scope, the protocol and attendance at start-up meeting,” according to Applied Clinical Trials, a peer-reviewed journal that covers clinical trials management.
“It is important to take into account the increase in both project management hours and costs resulting from the effort required to oversee and manage functional outsourcing providers.”
Despite sponsor organisations exploring various outsourcing formats, around 40% are yet to find the clinical development outsourcing model that works best for them, according to a recent study by pharmaceutical markets-research company ISR Reports.
“The problem with that number is that it leads to churn and uncertainty for both the sponsor organisations and the service providers,” says Andrew Schafer, president of ISR Reports.
Room for improvement
Whatever model is chosen, the operating performance of drug development has not substantially improved across the industry, according to Tufts CSDD. Drug development failure rates are higher now than they were in the 1990s, while development cycles are longer and patient recruitment and retention rates are lower. Drug development costs, meanwhile, are escalating.
A recent Tufts CSDD report argues that the majority of studies involving CROs and sponsors are not implemented as intended, with executives from both parties pointing to a lack of trust and poor communication as major obstacles to successful collaborations.
The CSDD report goes on to claim that pharmaceutical companies regularly treat their CROs as vendors rather than invested partners, with over 80% of CRO respondents saying that vendors rarely, if ever, ask for or implement their suggestions.
Outsourcing arrangements are also often decided on an ad hoc basis, changing their form from study to study with little or no standardisation and lacking discipline, with sponsor organisations opting for a number of different, sometimes paradoxical arrangements that ultimately end up creating uncertainty.
“Sponsor companies use a variety of conflicting outsourcing models to support their studies, mixing and matching the use of internal staff with niche and full-service providers under various relationship arrangements simultaneously,” says Getz in a 2016 article for Clinical Trials Yearbook.
According to Getz, many of these problems are due to the large, fragmented nature of big sponsor companies, the clinical teams of which are often unaware of which outsourcing arrangement is being used.
Teaming up
The issues can get worse when new partners arrive, with clinical teams often averse to “handing over existing projects to new partners” and, worse still, when companies experience mergers and acquisitions. Problems are also triggered by turnover of senior staff overseeing the outsourcing arrangements.
“Partnerships are prone to fall apart when new executives, who might have different ideas about sourcing models, take charge,” says Getz.
Some pharmaceutical companies have brought certain functions back in-house, but most will continue to rely on outsourcing. Analysts say the solution is to find the right sponsor-CRO match and build a relationship based on trust, strong communication, and shared goals and culture.
Shifting gears
“Sponsor companies must fundamentally change their outsourcing execution to capture a higher proportion of expected collaborative value,” says Getz. “Introspective assessment of current practices will play an important part in identifying opportunities to drive more consistent outsourcing execution. In-depth, open discussions with CRO partners will be equally revealing.”
What outsourcing models are chosen in the future will depend on how the industry changes. Clinical development may be a closely regulated industry, but the companies, technologies and science involved are always evolving.
“There is a saying in clinical development that ‘every study is different’,” says Schafer. “Each trial is unique in some way. Sponsor organisations and service providers will continually change the way they conduct clinical trials, and that includes the models used in order to provide the best service possible at a reasonable cost.”
