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European Pharmaceutical Contractor

In Demand

Over the next five years, the global medical device market for contract research organisations (CROs) is expected to grow at a compound annual growth rate of 12.5 per cent to reach about $7.4 billion by 2018 (1). The market was estimated at $3.6 billion last year.

Demand for outsourced medical device services has soared as products have become more complex, regulators require more rigorous data and sponsors seek to move into overseas markets – both to conduct clinical studies and market new devices. At the same time, medical device companies have moved toward full-service outsourcing and have become more strategic in their outsourcing relationships, turning to CROs as a first-line approach to clinical development, as opposed to a back-up for when they lack the internal resources to conduct a study.

“We are seeing more outsourcing and more rigorous outsourcing,” says Ryan Wilson, General Manager of Medical Devices at Medpace, which recently expanded its global medical device services through the acquisition of European CRO MediTech Strategic Consultants. “There are people who see the economic and expertise proposition with outsourcing. They are seeing it not just as capacity overflow, but also the ability for these CROs, who are really expert in running trials, to be able to handle them globally.”

Slow to Outsource

The strategic use of CROs for medical device studies marks a significant shift, since the device sector has historically lagged behind drug industry outsourcing.

Last year, the device sector outsourced only a quarter of its clinical development work, compared to 60 per cent from pharma companies, and typically conducts key activities in-house, according to a survey of medical device companies conducted by Best Practices, a research and consulting firm (2). Since even large device studies rarely involve more than a few hundred participants – compared to the thousands of patients enrolled in late-stage drug trials – and typically require fewer trials per product, large medical device companies often build their own staff to conduct small trials and then add employees, when needed, for larger trials.

“The number one reason we lose out on a bid is that clients choose to build with their own staff and internalise,” says Wilson. “But that is becoming less frequent. ” The clients for medical device CROs traditionally have been smaller, startup companies that lack the infrastructure to take devices through clinical testing to market. These companies turn to CROs for a full range of services, from protocol design to monitoring, to regulatory strategy.

“We found a good niche with the small to mid-sized companies, because they do not want to hire a huge internal department. With clinical trials, your people may or may not be busy all of the time. You are paying a lot of salary for people when they are not busy. Economically, it is better to outsource, especially for the small- to mid-sized companies,” says Jane Green, President of Morley Research Consortium, a Georgiabased CRO that sees 60 per cent of its business come from device companies.

Clinical Demand

Yet the CRO industry has seen demand for clinical development services – from both large and small device companies – steadily increase as regulatory agencies, both in the US and overseas, require more data before approvals. Depending on the device and indication, regulatory changes in recent years have resulted in more requirements for clinical testing and trials with many more patients. In the US, the Food and Drug Administration (FDA) has developed draft guidance that requires additional testing before medical device approvals, including data to show the company has focused on mitigating the risk of user errors in the development of the device, and plans for protecting the device from cybersecurity breaches.

Medical device companies also want to collect additional data during clinical trials, if it does not slow down the study, to prove the safety and effectiveness of their products for consumers, the medical community and payers. “It is getting a lot of scrutiny and pressure,” says Inger Arum, Founder and President of ProTrials Research, a California-based CRO that sees more than a quarter of its business come from devices.

Pamela Weagraff, Principal Consultant in the Quintiles Consulting Medical Device Development Practice, says that sophistication and scientific rigour in clinical study design for medical devices has steadily increased, and there has been a shift toward collecting more data in the pre-market arena, which has greater opportunity to mitigate risk before a device launches and has the potential to affect a larger population.

“The more thoughtfulness that is brought to clinical trial design, the more it actually yields better data, data of higher integrity and, thereby, is much more cost efficient than many of the studies run in years past,” says Weagraff. “If one can take a long view, it is always easier and less expensive to mitigate risk and a device design before you have large numbers of them in an installed space. The cost of recalls is not for the faint of heart.”

Expertise and Patients

Device companies also turn to CROs for expertise as products have become more complex, or if they have acquired another company and are entering a new area. The growth of combination products, which include both a drug and a delivery device, has also increased demand for consulting and development services from CROs. “The biopharma company is typically the sponsor for the drug or biologic and very commonly does not have medical device expertise. Combination products are increasing,” she says.

As device trials become more robust, CROs say they have not encountered a shortage of sites or patients to participate in studies; principal investigators are usually surgeons or interventionalists who work in a hospital setting rather than a clinic. “There is an appetite at sites for good trials and to participate in trials,” says Medpace’s Wilson. “We are not seeing a lot of competition for patients where it would slow down a trial. We are at a nice equilibrium where the demand from the sites and support in conducting trials matches the demand for more patients.”

New Growth

Historically, the US and Europe have dominated the medical device outsourcing market; Best Practices’ survey found, on average, 91 per cent of device companies conducted their trials in the US and Europe, and only two per cent of patients were from emerging areas (2). The US alone accounts for about half of the global medical devices CRO market, valued at $1.6 billion in 2011 and expected to hit $3.4 billion by 2018, according to GlobalData (1).

Although mature markets still represent a large percentage of most device companies’ sales, large device sponsors are feeling pressure to expand their clinical programmes into those areas that represent future sales, including China, India and Latin America. Best Practices found 77 per cent of medical device company executives believe the number of trials in high-growth/emerging areas – including Asia-Pacific, Brazil, Russia, India and China – will increase in the next three years, and they anticipate handling that growth by hiring more offshore and outsourced staff (2).

CROs have already been approached by large device companies for help entering new geographic areas. Large countries, including China and India, now require local clinical trials to win regulatory approvals to market products in those countries. In many other regions, markets are also more established in their own device regulations and approval pathways, and are demanding more data and rigour behind device trials. “There is pressure on medical device companies to be more global,” says Wilson. “With the evolution of regulations worldwide, there is going to be more demand for local data. When running pivotal studies, there will not be just one in the US or one in Japan as it used to be, but they will be running a truly global study.”

Standards and Testing

CROs are evolving to help deal with regional regulatory requirements, clinical trial procedures and standards. Medpace, for example, has developed global standard operating procedures that allow sponsors to conduct device studies worldwide from a common set of processes, while customising requirements on a local level. Meanwhile, at Theorem Clinical Research, many of its long-time device customers in the US are now looking to the CRO for help entering China.

At the same time, some CROs are seeing an increase in demand from offshore device companies seeking to test their products in the US. “We have devices come in from all over the world,” says Morley Research’s Green. “They may have run clinical trials for feasibility in whatever country they are in, but to sell it globally a lot of them want FDA approval. We bring it here, and depending on what information they have and how the study was managed, we may only have to run one clinical trial in the US as long as that data supports and correlates with the data they gathered in the past.

Once they have a CE mark or FDA approval, they can pretty much sell their device anywhere in the world. There are certainly some hoops to jump through in certain countries, but it is doable once they have got the European or FDA mark.”

Looking Ahead

The 2.3 per cent medical device tax, which was passed in the US as part of the Affordable Care Act, along with a decline in the number of venture deals and dollars going into the device sector, could slow the development of new devices. Nevertheless, industry experts anticipate that the amount of outsourced device work will continue to grow as development becomes more complex, the number of combination drug/device products increases and companies expand into global markets.

Those experts also expect outsourcing strategies among device companies to continue maturing as sponsors, both large and small, have begun to run specific processes for identifying CROs and vendors. Many are also evaluating their core competencies and expertise, and are adopting full-service outsourcing strategies; a recent MarketsandMarkets report found outsourcing has helped medical device companies reduce product development costs by 10 per cent, to 30 per cent (3). “Every year I see more and more outsourcing, and we see more trends like we saw in the pharmaceutical industry about a decade ago,” says Wilson. “We continue to see that, and it continues to mature.”

References
1. Medical discoveries are contracted out as research organizations move abroad, Study by GlobalData, June 2012. Visit: http://healthcare.globaldata.com/media-center/press-releases/medical-devices/medical-discoveriesare-contracted-out-as-researchorganizations-move-abroad
2. Report summary: clinical affairs excellence: benchmarking clinical trial strategies for pharmaceutical success in a global marketplace, report by Best Practices, November 2012. Visit: www.best-in-class.com/bestp/domrep.nsf/products/bfd013139429C4C9852579b50060fb6d!opendocument
3. Service outsourcing opportunities in medical device market worth US$26.77 billion by 2014, Study by MarketsandMarkets. Visit: www.marketsandmarkets.com/pressreleases/service-outsourcing-opportunitiesmedical-device-market.asp


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About the author

Karyn Korieth has been covering the clinical trials industry for CenterWatch since 2003. Her 30 year journalism career includes work in local news, the healthcare industry and national magazines. Karyn holds a Master of Science degree from the Columbia University Graduate School of Journalism.

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