The largest pharmaceutical companies not surprisingly rely on the largest contract research organisations (CROs) to support most of their outsourced research and development (R&D) activities [1][2][3]. The leading model for these relationships has increasingly become based on strategic partnerships, with sponsor R&D spend passing $500 million in 2014 according to PAREXEL's Strategic Partnership report [2][4].
Driving for maximum profitability, sponsors have been reducing the size of their own research teams and project-by-project resourcing [1][5]. They have been replaced by a preferred provider approach to outsourcing that involves highly integrated relationships spanning several years and multiple projects [2][6]. Conceptually, shared objectives, therapeutic knowledge, technologies and processes, as well as early and mutual involvement in protocol design and operational structure, should yield measurable efficiencies and gains in productivity [6][7].
With the change in the contribution that CROs make to drug development internationally we see CROs becoming almost as influential as sponsor companies in the pharmaceutical industry [1][8]. Experience shows that ever increasing prices for new medicines is the only way to square the contradiction embodied by the global CRO and sponsor organisations drive for ever-greater profitability required by financial institutions [9]. Concerns are already being voiced as to how much further healthcare budgets can be stretched [10].
But, if the ‘bigger-is-better’ approach represents the optimal approach to developing new medicines why are small CROs thriving? Simply put, the misconception made by procurement departments of larger pharmaceutical companies is that a CRO doesn’t truly reach world-class status until it has perhaps 10,000 employees and a revenue base in the hundreds of millions of dollars [3]. A closer look at the data however suggests that 80% of R&D does not take place in the largest companies [11]. Market estimates suggest that smaller CROs are sharing outsourced R&D worth $29.5 billion, no small number [3][12]. It underlines how small to mid-sized CROs are succeeding in what should be an inhospitable market. This is for a variety of reasons, primarily based on focus, flexibility and innovation [13]. Steve Jobs underlined how, in almost any market being the largest player doesn’t guarantee the best outcomes [14]. At a time when IBM was spending $100 on R&D for every $1 spent by Apple he said, “It's not about money,” he went on “It's about the people you have, how you're led, and how much you get it.” Ignore Steve Jobs at your peril [14].
It seems that in the pharma industry, large CROs have the global footprint required to conduct large studies, but they rarely offer the same kind of flexibility, personal service and senior management involvement offered by smaller research companies [6][13]. Furthermore, the industry is facing a staffing crisis [15]. The CRO industry’s acute understaffing issue is expected to become more of a burden as trial volumes increase and recruitment stagnates [15][16]. Strangulation by obscenely tedious Request for Information (RFI) exercises ensures that small CROs have little resource or appetite to engage with large pharma are excluding them from the benefits that can be gained from partnering with small and medium-sized enterprises [6]. As, over the last few years, procurement departments have been populated by process monkeys, it is also unclear whether they have the necessary industry understanding to navigate beyond the shallow waters of preferred partnerships [6].
Richard Scaife, Chairperson for the Pharmaceutical Contract Management Group (PCMG) says, “Too many RFIs are huge, meaningless mountains of tables that will never be used or looked at”. He also said, “RFIs should be used for purpose, not pain.” In contrast, if you’re a small to midsize sponsor, or just starting your biotech company, you have the opportunity to make resourcing decisions based on getting the best out of the relationship with your CRO and not some enforced arrangement that offers little opportunity to select who you work with [6].
From our own perspective as a small CRO, the top five reasons for ‘bigger’ not necessarily being ‘better’ in the CRO space are:
1: Undivided attention
It is only reasonable to expect to have the undivided attention of your CRO. Large global CROs get excited about large studies and big drug development programmes [1]. In real terms this means that smaller trials and smaller companies get less attention.[6] Contrastingly, even the smallest client is important to a small CRO [13]. Small Cros also have short lines of communication, meaning that they can respond to challenges much quicker – something we reflect in our BioStack™ offering.
For example, in 2011, Niche started working with Respivert, a small biotech based out of the Imperial innovation incubator in London. We worked with their small internal team on a 1:1 basis. Gill Dines, ex-Head of Exploratory Development at Respivert remembers, “Niche provided Respivert with a dedicated team who worked to a high professional standard, fully engaged with the Respivert team and coordinated with other service providers to deliver five early phase clinical studies in under 18 months.”
2: Staffing consistency
We have all heard how large CROs present you with the ‘A’ team at the bid defence, but as a small company with a relatively small trial you end up with the ‘C’ team who often have little experience, cycling through team members like a bad zombie movie [15]. In contrast, smaller CROs may, in fact, only have their experienced ‘A’ team – which is composed of team members that you probably know from previous projects (and will see your trial through from site selection to data/report delivery) [13]. Small CROs often have a much lower staff turnover than large CROs, and you can often identify the exact people you want to work on your trial [15].
“When Respivert was acquired by Johnson & Johnson it was only natural for us to want to keep working with the team we had been working for the last 2.5 years” said Lindsey Cass, ex-Head of Clinical Development, Respivert. Today’s clinical trials are complex, and there’s no substitute for experience at all levels [16]. Your large CRO might have tremendous experience as a company, but the CRA or the PM managing your trial may not. Check the credentials of the people assigned to your trial to make sure they have the experience you desire.
Another common misconception is that large CROs have a large volume of people on the bench available to work on the next big trial that comes in the door [1]. This is rarely true – having people on the bench waiting to start work affects your bottom line [3]. Most CROs operate at similar margins, so the large CROs have to go out and ‘staff-up’ for a big trial as smaller, bespoke CROs would need to [1].
3: Budgets and timelines
It is disheartening to watch your timelines and budgets continually growing without receiving a clear explanation from the CRO as to why this possibility wasn't raised when the work was commissioned [6]. Did you choose the large CRO because their initial bid was lower than the smaller CRO’s bid? This often happens but the change orders that inevitably come later may well drive your cost up to a level higher than you would have paid with a smaller CRO [6].
At the 2017 PCMG meeting in London it was generally agreed that CROs expect to recoup more than 25% of their turnover on post contract ‘out-of-scope’ negotiations.
Dr John Ferkany, US Senior Vice President for Development at Flatley Discovery Labs said “I have worked with Niche for well over a decade on more than 20 regulatory filings and subsequent early-stage clinical trials; these efforts spanned four therapeutic areas. All of these activities were provided on-time/on-budget in a very professional manner”. He went on to say, “Every submission was accepted by the regulatory authorities without major comment and minimal effort was needed if we changed focus.”
Clearly, small companies spend as little time on bureaucracy as possible [13]. As businesses become larger, processes become more fixed and rigid [6]. By stepping down a tier to a midsized CRO, clients enjoy the benefits of global scale with more flexible and often more innovative processes [6]. Clients of smaller CROs say much of the appeal of working with them is an enhanced ability to make quick decisions and adapt to study changes on the fly [13].
4: Relationships
Large CROs can mobilise a team quickly, but do you want to know who these people are? Even if you do, the team that starts your trial aren’t always the ones who deliver the final results [15]. If you desire to have the same people working on your trial from start to finish, choose the boutique CRO [13].
Garth Rapeport, CEO of Pulmocide, said “When we started Pulmocide we wanted to continue to benefit from the relationships we had built with the Niche Team in our earlier ventures.” It’s a mistake to assume that the largest CROs necessarily have the most talented scientists [13].
Many smaller CROs were founded by individuals or groups of scientists whose expertise in a therapeutic area or other discipline that provides a competitive advantage [11].
Small isn’t just beautiful – small can also be global. Geoff Down, previously Director, Clinical Pharmacology and Discovery Medicine at GlaxoSmithKline said, “I was fortunate to work with members of the Niche Team. Relevant activities were: reporting and publication of clinical studies; cross-study tabular data integration; text-based programme descriptions and preparation of data summaries and clinical overviews. The majority of this work was in connection with major global regulatory submissions; including new medicinal entities and a first in class
5: Costly delays
Once your investigational product leaves investigations in healthy volunteers recruitment is often a challenge [16]. Insight and experience can save delay [16]. Staff turnover at CROs is high, and it’s common for large CROs to change your project manager mid-trial [15].
While the issue of not enough qualified, experienced clinical research staff globally has no clear immediate fix, smaller pharma, biotech and medical device sponsors say they often have trouble gaining needed expertise, personnel and resources when partnering with the top-tier CROs [15].
This may reflect the fact that those working in small companies claim to be more engaged, have broader scopes of work and responsibility, have more of an opportunity to “make a difference” and feel more trusted – experience less micro-management and ‘process’. Moreover, innovation is an elusive quality under the best of circumstances and is hard to come by in large organizations with established work processes [13]. This can extend your timelines as the new PM gets up-to-speed on your trial [15].
The constant changing of CRAs and PMs can lead to frustrations at the site level as well [16].
In conclusion, there are a host of great research organizations of all sizes in the marketplace [1]. Just because a CRO doesn’t have revenue greater than $1 billion or staff in 75 countries doesn’t mean it can’t be a valuable partner to a wide variety of sponsors [3].
Behemoths like IQVIA and Covance were once midsized CROs that grew by providing strong services to their client bases [1].
One last point you might like to consider, when CRO business development teams start to outpace staff recruitment and management strategies, the larger CROs begin to feel resource pressures [15]. From time to time they respond by calling on smaller CROs to help them out. In the end you may not be getting what you paid for.
We recommend that you take an objective look at your situation, the realities of the CRO marketplace, and what’s most important to your company during your study. Then make the objective choice – connect with us to learn more about how we can help you handle your complex challenges.
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