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International Clinical Trials

Market Analysis

The 11th Annual Partnerships in Clinical Trials Congress and Exhibition took place in Hamburg at the start of November – an opportunity for pharma to assess the state of the post-recession market and explore the way ahead in terms of strategic alliances, outsourcing and collaborations. Some 900 people descended on the event at the CCH Congress Centre, with 300 delegates attending stimulating and informative plenary and breakout sessions during the two-day conference. The supporting show featured around 100 exhibiting companies. New organiser Sarah Palit did an excellent job with the innovative programme. Competitive Outlook Day one of the conference included presentations from Big Pharma, CROs, finance houses and academic bodies.

Professor Joe Nellis, an economist from Cranfield University, gave a competitive outlook for 2013 and beyond, not only for the pharmaceutical world but business and industry as a whole. He believes the global recession has just about bottomed out, but noted that the world seems to be on a ‘two-speed track’, with the BRIC countries (Brazil, Russia, India and China) continuing to expand rapidly, albeit at a reduced rate, while the developed world struggles with low growth rates.

The balance of power will shift massively in the next 25 years, he predicted, with changes driven by:
● A massive realignment of economic activity
● Technological connectivity
● The growth of corporate governance
● Universal and unprecedented access to information
● A growing demand for resources – exemplified by the demand for water
● New global industry structures, particularly with the value of intercontinental partnerships
● Management techniques stemming from increasing complexity that requires science-based solutions

Mike Wilkinson, Executive Vice-President and Chief Information Officer at PPD, discussed the role of technology in driving clinical research, and how it may be used to reduce cost, gather information faster and leverage growing patient consumerism.

He noted that, in his business lifetime, there had been little change in the organisation of clinical trials – but changes are now needed. In particular, IT departments should become integrated in the clinical research process, rather than driving the process from outside. In short, he said, research teams should tell IT what they want, rather than fitting their trials around what they are told is available. In addition, CRO and IT strategy needs to be aligned with corporate strategy, and research teams aligned with company business strategy.

Dr Emiliano Rial Verde, a consultant with McKinsey who is an academic neuroscientist by training, explained that the cost of clinical operations is increasing by some 20 per cent each year, while the internal rate of return on pharma research is inadequate – the current rate of 5.7 per cent needs to be doubled to make the industry truly sustainable.

One of the mechanisms for doing this, he argued, is for pharma companies to create solid collaborations that generate new infrastructure. The strategic partnerships that have been recently announced are only the start of the solution to the problem of returns. He also said Big Pharma has to ‘stop pretending it knows best’ and must reduce and realign oversight of clinical operations.

Strategic Outsourcing

In the afternoon, the conference split into four parallel workstreams. I attended the stream on strategic outsourcing, which featured a panel discussion that enabled CROs, consultants and medium-sized biotech companies to voice their differing opinions. The panel examined the merits of four basic outsourcing models: traditional tactical CRO use; full hands-off outsourcing; functional service provision; and in-sourcing – as well as a combination of all of these.

As with most discussions on strategy and outsourcing, the panel focused on efficiency and cost savings as though these are the ‘holy grails’ of the industry. Only Nick Gammon, a Senior Outsourcing Manager at Amgen, raised the idea that outsourcing could in itself generate value for a company – surely the ultimate goal of any outsourcing strategy.

There was also an interesting presentation by Rikke Winther of Lundbeck which showed the early benefits of pharma companies collaborating when outsourcing, particularly when their interest is in the same therapeutic area. Perhaps this interesting concept will become more of a model for medium-sized companies that feel they lack suffi cient infl uence when dealing with major CRO partners.

Building on this, Phillip Miller of Thomson Reuters UK discussed the most recent available reports on performance related to outsourcing strategy, as reported to the Centre for Medicines Research International (CMRI). Based on data from 2010, he outlined a wide range of programme metrics, and broke down milestone timings according to the four outsourcing practices: transactional; functional service provision; wholesale; and business process.

Surprisingly, only 23 per cent of work in 2010 seemed to have been outsourced. Full service provision, he said, was reducing, while wholesale outsourcing – after remaining static for several years – suddenly doubled to nearly 20 per cent in 2011. He also noted that wholesale outsourcing has been driven by the decline of data management outsourcing. Encouragingly for CROs, studies that are 100 per cent outsourced are, on average, up to two-and-a-half months quicker, with no therapeutic differences between either easy studies – for example, antibiotics – or complex studies such as oncology. Even things like starting enrolment were over a month quicker in outsourced studies.

He forecast smaller scale studies in future, as a result of fewer R&D funds. There will be a greater focus on rare or unusual diseases; more biopharmaceutical entities; and more personalised medicine, in combination with companion diagnostics.

Market Conditions

Day two also started with a plenary session focusing on market conditions. The view of Tim Wilcock from Leader Partners was that industrial companies appear to be almost awash with cash, while private equity is looking for good opportunities to invest in CROs. He also reported that R&D spend is growing at about 1.5 per cent compound average growth rate, of which some 30 per cent is thought to be research.

Tim gave an interesting view on the global outsourced market. His figures on the market size, and those from financial analysts, average out at about $26 billion: $11 billion in the US; $6 billion in the European Union; $4 billion in Eastern Europe; and $5 billion in the rest of the world. Much higher average figures have been given by Tufts University, PCC and Harris. He forecasted that penetration of the market would grow at 5-8 per cent, leading to an average growth rate of 8.5 per cent, most of this being in Phases 2 and 3. He also said the rest of the world contribution could double by 2017.

The speaker reflected briefly on strategic alliances which seemed to be only available to those CROs with annual revenues in excess of $100 million. He also predicted some big financial transactions in the next few years for major CROs, with $20-200 million companies ripe for consolidation.

Long-time observer of the CRO scene, Ken Getz from CenterWatch and Tufts University, further explored this market area. He estimated there are about 6,250 CROs, with the market growing by 13 per cent. The US market alone is $30-40 million and employs 154,000 people, he said. The differences between these and Tim Wilcock’s figures can be largely accounted for by what they define as a CRO.

According to Ken’s research, companies are reluctant to subcontract design and planning of clinical trials, and have also retained control of regulatory strategy. Although the jury is still out on the success of some recent strategic alliances, both Pfizer and Eli Lilly have reported major savings of around 20 per cent, compared with in-house clinical development. US consulting firm Avoca has determined that 16 per cent of companies report no cost saving and no cycle time reduction with the use of CROs. Ken reported that strategic alliances may drive CROs towards technological innovation, so long as pharma companies give them a relatively free hand. An example of this is Quintiles’ ever-closer development of relations with major academic sites.

He was bold enough to make some predictions too: fewer countries involved in clinical trials; more strategic alliances and integration between CROs and health system providers; and improved relations with patient groups, which could save clinical trial managers significant amounts of money.

Future Predictions

In the final plenary session of the conference, PharmaNet’s Vice-President and General Manager, Robert Lasser, also made some predictions about the shape of clinical research in a decade’s time. He noted that chronic disease will soar as populations become richer and survive longer; that payors will set more rules derived from an increasing attention to consumerism; and that more money will be being spent on the prevention of disease.

Robert takes the view that, by 2022, a billion extra people will require healthcare. Of these, some 20 per cent will be over 65 years of age. Over the next 10 years, more consumer input will be made at the early stages of trial design; first time in man studies will become more adaptive; and there will be less monitoring, he said. Focusing on future demands, he argued that drugs will need to break even sooner and be faster to market, while R&D costs will have to be lower.

Wrapping up the conference, Dave deBronkart, a leading spokesperson for the e-patient movement, shared his remarkable story. Over four years ago, he was diagnosed with terminal cancer and given a median of 24 weeks to live, yet has since recovered to apparent good health. Dave emphasised the role that using electronic information resources played in his recovery (see epatientdave.com). It was an inspiring end to this year’s PCT Congress and Exhibition, which is now a well-established and prominent event in the annual pharma calendar. I hope it will go from strength to strength and look forward to next year’s meeting in Vienna.

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