CROs – Is the sun rising or …. – Michael Herschel

Michael Herschel Is the sun rising or …..
Herschel’s Heresies
Synopsis
Contract Research Organisations (CROs) have enjoyed a positive change in pharmaceutical outsourcing policy, which coupled with a rise in the number of patients per NDA has further supported current success. In his two-part article, Herschel submits his CRO situation analysis and refers to changes within the pharmaceutical sector that may have a big impact on their future.
The development of CRO’s
In the past ten years, more and more pharmaceutical companies have outsourced part of their clinical trial programmes. Although originally employed to minimise peaks in internal resource requirements, the percentage of outsourcing has grown to the extent whereby it now exceededs 50% of the total workload in some companies. Smaller companies have used CROs in order to save building-up internal clinical trial expertise prior to reaching a critical mass. In addition, recent years have seen a rise in the number of patients per NDA and consequently a proportionate rise in the number of patients per clinical trial programme. Thus, CROs have been able to seize an increasing share of this market. They have also followed in the footsteps of pharmaceutical companies and used mergers and acquisitions to strengthen their market position. Today, just five CRO’s control over 50 % of the market.
Most CROs offer “full services” management, with very few focusing on “indication” or “specialist” services such as data management or programme planning. However, some companies have recognised a need to attract subcontractors and have moved to integrate subcontractors into their companies to enhance their service profiles.
The value proposition of CRO’s
Contract Research Organisations, like business consultants, usually advertise themselves as having “a major group of clients”. They often state that their learning curve is much steeper and also claim to bring a variety of experiences to a trial compared with that procured by a single company – especially one that has experienced little fluctuation within its clinical research department.
In contrast, it appears that staff turnover within the CRO sector is considerably higher than that experienced by pharmaceutical companies. This is mainly because most personnel would prefer to join a pharmaceutical company, which they perceive to be able to offer more job security than a CRO can. Therefore, CROs have to spend a larger proportion of their money on education and training.
In a survey that we conducted to assess the performance of CROs, we did not find them to be faster, or more cost effective than drug companies. The survey found no difference in data quality either. This may not come as a surprise – one reason being that CRO deployment is often used to save potentially idle personnel, which is a consequence of the fluctuations incured by one’s drug pipeline.
It appears that one of the special properties proffered by CROs is their presence in countries in which pharmaceutical companies are not. This is of particular importance to pharmaceutical companies that do not wish to build up their own research departments in certain countries. It is also of service to smaller pharmaceutical companies that cannot be present in various countries for financial reasons.
Outsourcing criteria
In presentations CROs like to discuss different outsourcing tactics and strategies. Contract Research Organisations consider tactical outsourcing to be less desirable as it means irregular employment, which is tendered according to cost. CRO’s usually prefer strategic alliances, which represent more security and so enables them to build up more competencies with the aim of achieving preferred provider status.
Decision of outsourcing
The decision to outsource clinical trials is usually based on a cost/benefit calculation. While in some cases the sheer absence of skilled personnel may force a company to outsource parts of the drug development process, it is usually because of the cost implications. Keeping a large and inflexible clinical research department makes less business sense. In some cases key departments prefer to maintain a low headcount and, hence, a reduced level of outsourcing. However, this may not have a positive affect on the cost base mid- and long-term.
(C) 2008 – Alle Rechte vorbehalten

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