| Organisations offering management solutions to CROs are forming a growing industry sector; John Paul at Frost & Sullivan stresses the importance of building alliances
The high costs involved in the drug development process, tightening constraints in terms of monetary resources and the need to keep up the pace with rapid advances in technology are all factors driving the pharmaceutical industry towards alliances with service providers who can fill voids in their companies’ capabilities. With the exception of larger companies, who are capable of taking on risk, the pharmaceutical industry relies on outsourcing to reduce the burden of the drug development process and clinical research.
Loss of protection over invented drugs through patent expiry and low revenues emphasises the need for continuous investment in R&D, replenishing the pipeline with new and promising drugs. However, massive investment in infrastructure is needed in order to establish international standards to efficiently and safely execute clinical trials. The uncertainty of results is a major factor which forces companies to depend increasingly on outsourcing clinical research and R&D to contract research organisations (CROs) with proven capabilities.
PERCEPTIONS
Clinical outsourcing has evolved considerably over the last decade, as has the approach towards selecting and managing a CRO. It is common practice among pharmaceutical and biotech companies to form a long-term partnership with a selected CRO, helping to improve the relationship’s efficiency. Recently, the business model has been revised; companies send requests for proposals (RFPs) to various CROs. This model gives less importance to creating strategic synergy between the two parties, and the service provider with the lowest price usually wins the competition. However, the model is very popular among companies where cost-cutting is the prime objective, and where companies expect the best value for money. With increasing competition in the CRO market, it is essential for the service provider to promise quality, adherence to deadlines and budgets to win contracts. Driven by intense competition, CROs very often tend to make unrealistic promises in response to the RFPs. Hence, it is essential for the pharmaceutical and biotech companies to identify the CRO that can both deliver quality results and stick to the timelines – this is more problematic with the RFP model. |
