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European Pharmaceutical Contractor

Outsourcing Opportunities

The emerging markets in Europe, the Middle East and Africa (EMEA) have become attractive regions for pharmaceutical outsourcing due to easy access to large treatment-naďve patient pools, low labour and manufacturing costs, and highly skilled medical research talent. In fact, the population of Central and Eastern European countries exceeds that of either the US or the five largest Western European markets combined. Furthermore, there is a lower saturation of competing trials within the region compared to other, more developed markets; and recruitment and retention are strong. However, due to regional differences in commercialisation and regulatory pathways, the need to partner with local clinical trial expertise is a critical plank in any pharmaceutical company’s globalisation strategy.

After the fall of the Iron Curtain more than 20 years ago, countries such as Russia and Poland arose as outsourcing hotspots in Europe, but the clinical trial market has been stagnant there during the last decade. Now, thanks to the mercilessness of the patent cliff and maturing drug markets in the US, Japan and Germany, pharmaceutical companies are searching for opportunities in Central and Eastern Europe to renew profit generation and grow market share. As a result, contract research organisations (CROs) are following their pharmaceutical brethren into EMEA, which has led to an increase in deals activity and infrastructure investment in the region. A larger presence in countries such as Russia will help CROs to expand both their client lists and revenue bases.

Regional Deals

BioRasi and Ukraine BioRasi has recently completed its acquisition of Sponsors Clinical Research Group (SCRG), a CRO based in the Ukraine. SCRG has conducted clinical studies in various therapeutic areas including cardiology, neurology, oncology, endocrinology and pulmonology since 2004. The business combination enhances BioRasi’s geographic footprint, addressing the ever-increasing demand for optimising global clinical trials. The purchase will also build upon BioRasi’s presence throughout Eastern Europe, which currently includes a site in Moscow, Russia.

Chiltern and Czech Republic
Sotio, A.S. is a biotechnology company based in the Czech Republic that is developing next-generation active cellular immunotherapies focused on treating cancer and autoimmune diseases such as rheumatoid arthritis. To help run its clinical trials, Sotio selected Chiltern – one of the leading CROs in Europe – to carry out its Phase 3 global VIABLE clinical trial, which includes 1,170 patients from Europe and the US who have been diagnosed with prostate cancer. Chiltern will be responsible for managing 126 treatment centres in 17 European countries, where a total of 750 patients are expected to participate in the trial.

PRA and Russia
In March 2013, PRA announced it had acquired ClinStar, LLC, a privately held CRO that manages Phase 1-4 clinical research trials in Russia. ClinStar is the largest independent, geographically focused CRO in Eastern Europe, providing clinical development services to a wide range of pharmaceutical and biotechnology companies. The ClinStar acquisition appears to illustrate PRA’s dedication to supporting its growth in Russia and Eastern Europe. The purchase is well-aligned with PRA’s goals of meeting the needs of its clients by establishing a stronger presence with one of the most well-established CROs in the region.

The acquisition will include ClinStar’s stand-alone clinical trial warehousing and logistic division, IMP Logistics, which has operations in Russia, the Ukraine and Belarus. Through IMP Logistics, PRA will now be able to offer its clients top-quality cold chain logistics services that include the importation of investigational products, clinical supplies, laboratory kits and storage in multiple temperature zones. It is expected that PRA will integrate the approximately 300 ClinStar and IMP Logistics employees, thereby augmenting its operations and expertise to create a significant competitive advantage in the region.

QPS and Austria
Delaware-based QPS has bought a controlling stake in JSW Life Sciences, Austria’s largest provider of drug development services. JSW conducts clinical trials for treating central nervous system disorders, such as Alzheimer’s, Parkinson’s and Huntington’s diseases, and schizophrenia. While the financial terms were not disclosed, all of JSW’s business will be conducted under the QPS-JSW moniker from here on in. QPS’s acquisition of JSW has added to the company’s capabilities in Phase 2-4 drug development, and expanded its market share in Central and Eastern Europe.

Quintiles and MENA
Quintiles expanded its commercial services in the Middle East and North Africa (MENA) by signing a strategic partnership with Dayarn Pharma. Dayarn is a United Arab Emirates (UAE) based company that specialises in the biopharmaceutical sales, marketing and regulatory affairs needed to maximise brands in the Arab Gulf region. The partnership will allow Quintiles to deliver pharmaceutical contract sales force and sales promotion outsourcing services to customers looking to accelerate outcomes into new markets, especially in Saudi Arabia, UAE, Qatar, Oman, Kuwait, Lebanon, Jordan, Morocco, Algeria and Tunisia.

It is believed that there is strong demand for services promising significant growth in the MENA region, with Saudi Arabia, the UAE and Egypt standing out as the largest markets in terms of projected value and growth potential. Dayarn brings a wealth of experience in the MENA region, delivering high-quality marketing solutions for biopharmaceutical customers seeking to expand their geographic footprint while minimising risk. The Dayarn partnership reinforces Quintiles’ existing presence in the region, following the company’s joint ventures in Egypt in 2010 and Turkey in 2007.

Synexus and Poland
Synexus further strengthened its leadership position in Poland with the acquisition of Osteomed, for an undisclosed sum. Based in Warsaw, Osteomed is a well-respected medical facility and clinical research company dedicated to studying bone disorders. The acquisition brings a pipeline of studies to Synexus, as well as relationships with many of the world’s leading pharmaceutical companies. The purchase of Osteomed will extend Synexus’ presence in Eastern Europe, adding to its clinics in Hungary, Ukraine and Bulgaria.

Poland has developed a significant role in the clinical trials market, offering attractive benefits such as access to high-quality medical expertise, cost advantages and a motivated patient population which facilitates clinical trial recruitment. Synexus has been a major player in Poland since the company’s inception 20 years ago. The business already has clinical trial sites in Wroclaw, Warsaw, Gdynia and Katowice. The Osteomed acquisition will essentially quadruple its capacity across these four sites, enabling Synexus to offer additional scale, infrastructure and therapeutic expertise, which will be vital to supporting future business growth.

Synexus and South Africa
In addition to extending its reach in Poland, Synexus established its fourth site in South Africa with the opening of a new in-patient facility in Pretoria. The new site – named the Nyeleti Research Facility – has been developed for Phase 2-4 pulmonary studies. These studies usually involve 24-hour serial spirometry (lung function) visits, which require patients who are being treated through infusion to have to stay overnight.

The facility includes an in-patient ward, and houses emergency and other resuscitative equipment, a mobile laboratory and ambulance transport. The site also has a secure, temperature-controlled dispensing unit designed to manage supplies according to international and countryspecific clinical practice guidelines.

The new site will support the company’s existing clinical trial centre in Mamelodi, just outside of Pretoria, giving Synexus easier access to a patient pool of more than 3.5 million and a wider reach to conduct studies in paediatric groups. The cities of Mamelodi and Pretoria have patient populations with a high public awareness of the benefits of clinical trials, which speeds up recruitment times, often helping to ensure clinical trial success.

Location, Location, Location

The dynamics of pharmaceutical outsourcing and location decisions in emerging markets are changing. Cost reduction is being augmented, and will gradually be eclipsed by footprint growth as a major factor shaping decisions. CROs are realising that being closer to their customers is a key building block to establishing sustainable, long-term relationships. In addition to strategic partnering, CROs are growing their physical infrastructure and reaching out to local human capital with the regional expertise to run these new operations.

Infrastructure Investments

Accovion and Czech Republic/Russia
Accovion has expanded its presence in emerging Europe, establishing subsidiaries in both the Czech Republic and Russia, giving the company better access to local clinical research talent and allowing it to be more responsive to clients’ growing needs. The company has appointed two Managing Directors – Dr Jiri Skopek for its office in Prague and Dr Nikolay Odinstov for its Moscow site. Both offices’ services will include study planning, clinical monitoring, pharmacovigilance – including post-marketing, safety and data management – medical writing and electronic publishing.

Chiltern and Israel
Chiltern has opened an office in Israel to aid in the company’s recruitment efforts of top-notch staff, and to be strategically situated near clients. The new legal entity in Israel is the result of greater demand from clients, as the region is becoming increasingly attractive to pharmaceutical companies for conducting clinical trials. Chiltern will take advantage of Israel’s highly educated workforce, as the country has many renowned key opinion leaders and one of the highest numbers of doctors, scientists and engineers per capita in the world.

ClinTec and Turkey
In order to provide the company’s global team with access to a new patient population and further consolidate its presence in the MENA region, ClinTec has opened an office in Istanbul. This will add to its current regional offices based in Cairo, Dubai and Beirut.

CromSource and Poland
CromSource has completed construction of a new office in Warsaw, Poland. The office will serve as a key site for the company to deliver clinical projects to sponsors in Poland and other Central and Eastern European countries. In addition to clinical operations, CromSource has also relocated general company services to Warsaw, including human resources, patient enrolment functions and finance.

Pharm-Olam and Kazakhstan
Pharm-Olam has announced the successful expansion of clinical trial services into Kazakhstan. It is believed that these efforts reaffirm the company’s status as one of the leading service providers in Eastern Europe and the CIS region.

PRA and Romania
A new office in Bucharest, Romania, has further strengthened PRA’s coverage of the Balkan region’s growing clinical market. Bucharest is a key business and life sciences hub, and staff in this office have convenient access to top universities, academic research sites and most of the country’s major hospitals. PRA began conducting clinical trials in Romania back in 2006, and has steadily increased its staff and services to include product registration and early-phase studies. The Bucharest office will also support projects in the neighbouring Republic of Moldova.

Quintiles and Russia
Quintiles has signed a definitive agreement with RVC Biofund, a Russian-based investment firm, to support the expansion of clinical development services within the Russian Federation. RVC is a government fund which invests government capital through venture capital funds that it creates in partnership with private investors. The partners will work to address Russia’s healthcare initiatives in accordance with the country’s Healthcare 2020 Development Programme. One of these initiatives is to address the under-representation of clinical development activity in the country. RVC and Quintiles will help create high-technology services companies within the Russian Federation to advance the biopharmaceutical sector using investments from RVC. RVC has backed 12 funds holding a portfolio of 101 companies, with a total capitalisation of about $860 million.

SynRG and Ukraine
A new site in Ukraine has expanded SynRG’s presence in the emerging European markets. The Kiev site covers all aspects of clinical trials: site selection, preparation of study documents for submission, regulatory support, and clinical and safety monitoring, while data management and statistics will still be done through SynRG’s Moscow office. To run the site, SynRG has appointed Sergiy Pakharyna as Director and Regional Team Leader: an expert in Ukraine’s regulatory structure with extensive experience in the organisation and management of clinical trials in that country.

Conclusion

The biopharmaceutical industry is currently facing significant headwinds. The blockbuster era is over; development costs are skyrocketing, uncertainty exists around regulatory and reimbursement, and patent cliffs, generic erosion and a sluggish global economy all have industry executives losing sleep at night. To respond to these pressures, biopharmaceutical companies have been changing the way they approach virtually every aspect of their business, including R&D.

To remain competitive, drug makers are intensely focusing on generating more value and productivity out of every dollar spent on clinical R&D. The challenge of accelerating pharmaceutical product development while controlling costs creates a difficult balancing act for industry executives. However, through the use of strategic outsourcing with third-party vendors, drug makers can maximise their internal resources while, at the same time, entering into risk-sharing agreements with CROs to generate significant cost savings.

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Adam M Dion is an Analyst in the Healthcare Industry Dynamics Team at GlobalData. He is an author of GlobalData’s PharmaLeaders benchmark reports, which rank the competitive positions of the top companies in the pharmaceutical, biotech and CRO/CMO sectors. Prior to joining GlobalData, Adam was an Analyst with Technology Business Research, a leading market research and consulting firm. His analytical commentary has been quoted by leading sources, such as The Wall Street Journal, Bloomberg, Forbes, Financial Times, The Guardian, CenterWatch and Outsourcing-Pharma. Adam received his BS in Neuroscience from Merrimack College, and MS in Marketing from the University of New Haven.
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