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International Clinical Trials

Strategic Review

Back in 1996, the pharmaceutical consulting company Technomark and engineering consultancy InterMatrix carried out a major project investigating outsourcing practices in other industries. The study looked at major multinationals such as IBM, Ford, Xerox and British Airways, analysing their outsourcing practices and comparing them with those of the pharmaceutical market. The conclusions were stark: the research revealed that pharma was far behind these market leaders.

Since this initial warning shot, the pharma industry, at least in drug development, has been dragged uncomfortably towards the realisation that outsourcing, as it was practised in the 1990s and before, was hardly optimal.

Indeed, it is only in the last three to four years that the industry has begun to practice what it calls ‘strategic outsourcing’ – and it was against this background that the 12th annual Partnerships in Clinical Trials Congress (PCT) took place in November.

Staged at the Reed Conference Centre in Vienna, this longstanding event grew out of a series of conferences organised jointly between Informa and Technomark. From an early event in London in 1993, attended by around 60 delegates and half a dozen exhibitors, it has now expanded to a congress with more than 1,000 delegates, 150 speakers and some 100 exhibitors – regarded as one of the most important annual clinical development events in Europe.

Partnership Cliff

This year’s two-day PCT kicked off with an opening plenary session debating ‘The Partnership Cliff: What Happens Next’, moderated by BBC television presenter and journalist Kirsty Wark. The panel was composed of three senior executives from the pharma industry and two senior executives representing contract research organisations (CROs).

As panel discussions go, this was quite good, highlighting the differences of approach between Big Pharma companies, as well as how large CROs have varying attitudes towards their clients.

The panel recommended that top executives in sponsoring pharma companies need to change their mindset towards outsourcing and see it as a positive benefit, rather than a last resort measure the firm is forced into. Another discussion area was how all clients expect to be treated as preferred clients while paying the lowest possible price.

In the eyes of sponsors, many CROs offer very similar services, so the panellists also debated how they can better differentiate themselves from their competition.

Interestingly, one of the biggest concerns highlighted by the panel was that of import and export licences for drugs, comparator drugs and specimens obtained in studies. They felt that regulations are changed and updated with such frequency that the surrounding bureaucracy is a significant problem.

Data and Compliance

Following the debate, Barbara Tardiff from Pfizer explored how technology will shape and innovate clinical trials. Like many others at this conference, she emphasised that drug development is a team effort and said it is vital that R&D systems are interconnected. She underlined that software, together with devices such as smartphones and social networking resources like Facebook, are part of the future landscape of trials.

Pharma companies have been reluctant to reuse their own data, but Tardiff felt that by doing so – as well as using publicly available data – predictive analysis could be improved. At one time, computer capacity and speed limited the use of data. However, as ‘big data’ becomes more conducive to analysis – as was shown by the Google analysis of query data to project the spread of the H1N1 virus – the use of all internal and public data means accurate prediction is becoming increasingly feasible.

The combination of new data, new analysis and new scientific knowledge with advancing technologies is also making for improved patient recruitment and adherence to trial protocols.

Next up, Alan Morgan from RPS and the Avoca Group’s Patricia Leuchten examined how companies can unite to achieve oversight compliance. Both the Food and Drug Administration and the European Medicines Agency have increased their level of scrutiny over the last few years, in terms of warning letters issued and critical findings. Morgan stressed how important it is for companies to comply with multiple agencies, not just those in their home country or region. He also observed that many companies use their resources inefficiently and do not have comprehensive documented processes for oversight.

In addition, Leuchten spoke about the development of best practice and industry standards for quality management in outsourced trials. She gave the example of an Avoca consortium which has been set up to lead and assist sponsors and CROs in optimising and better aligning their proactive quality management.

The results of Avoca’s surveys point to a disturbingly low level of industry satisfaction in terms of value or quality, and reveal that CROs believe they are held to a higher standard, compared to sponsors’ internal processes, she said.

Economic Implications

It is always good to hear from speakers outside the pharma industry, especially when they have provocative comments to make, and this was the case with Thierry Malleret. The Co-Founder of The Barometer newsletter, he gave a presentation on the current global economic landscape.

Malleret argued that economists are confused. The world is in the midst of an epic transition phase driven by interdependence of nations, the complexity of the world economy, the speed of innovation-led change, and the phenomenon of transparency where it appears that everything is known to everyone.

Although not a great believer in quantitative easing, where governments pump money into economies, he said this is the least damaging of all public policies, even if it does inflate asset prices.

He commented on four economic ‘experiments’ that could have implications for pharma outsourcing:
  • China is spurring on internal demand
  • Japan is pursuing an aggressive monetary policy
  • Europe is trying to preserve the integrity of the Euro currency
  • The US is boosting growth through quantitative easing in a fractured environment
Disconcertingly, he felt that the economic outlook is both feeble and precarious; that emerging markets are at a particular disadvantage in the field of technological innovation; and that medical expenditure will be unsustainable in the long term.

Industry Schism

The congress then split into four workstreams, focusing on strategic partnerships, cutting-edge clinical delivery, innovation and risk-based monitoring. I attended the first one, which featured a series of panel discussions where both vendors and buyers debated how effective strategic partnerships work in practice.

There seems to be a schism developing between those who favour strategic partnerships, whereby virtually all or most activities are outsourced to CROs, and those who believe that functional outsourcing of only specific activities is the way to go.

Sadly, much of the emphasis in these panel discussions was how to squeeze cost out of a CRO, without looking at how much value can be generated. In response to a question about delivering value, panellists talked exclusively about driving down prices.

It is not only CROs that are ‘feeling the pinch’ in this respect; clinical laboratories also said they are finding it difficult to bring value and are not involved early enough in the trial process, often presented with a fait accompli of a protocol with its concomitant clinical laboratory measures. One interesting suggestion was that, at an early stage in bidding for contracts, a company should organise an information webinar. A straw poll of the audience was very much in favour of this proposal.

Partnership Working

There were also joint presentations between CROs and sponsoring pharma companies, with PPD and Novartis, followed by Merck Serono and Quintiles, outlining their partnership working. Both these ventures seem more strategic than many that were discussed during the workstream, although still not in the same advanced way as those market-leading non-pharma multinationals, highlighted in the Technomark and InterMatrix study back in 1996.

This lack of true strategic alliances, it was agreed, is probably caused by the fact that the long-term objectives of the two parties are not, and cannot, be the same. Pharma companies are looking to develop drugs and successfully bring them to market, whereas CROs are selling their services and looking to profit from trials, whether or not the trials are successful.

R&D Progress

The second day of the congress kicked off with a keynote presentation by Dalvir Gill, the Chief Executive of Transcelerate. This non-profit organisation focuses on advancing innovation in pharma R&D, identifying and solving common research challenges – including reducing the burden on investigator sites – and improving patient safety. It has evolved from discussions in various forums between executive R&D leaders. The ten founding companies represent two-thirds of R&D expenditure, and a further eight firms have since joined.

Gill outlined its current initiatives, which include:
  • Implementation of data standards through the CDISC and CFAST initiatives
  • Comparator drug provision
  • Risk-based monitoring methodology
  • Shared site qualification and training-mutual recognition
  • Collaborative technical platforms
With these initiatives all progressing well, and further work areas planned on common protocols, a global registry of clinical trials and clinical trial networks for minority populations and paediatrics, the organisation is clearly on the right track – improving pharma R&D, without overly changing or innovating the process itself.

Financial Risks

Michael Martorelli from investment bank Fairmount Partners then explored the financial aspects of public and private equity funding for the industry. After a recent hiatus in the profitability of pharma companies, they have now recovered to be significantly more profitable than CROs.

Martorelli noted that private equity has done many major deals with the CRO industry, and indeed has brought much financial discipline to contract research businesses. However, he warned that the impact of partnerships will make CROs more vulnerable to cancellation, possibly cause problems in the conversion of backlog into revenues, and may result in the majority of clients using a small number of specific CROs. Worst of all for CROs, partnerships will grow revenues but not margins, and thus decrease percentage profitability.

In addition, Martorelli predicted a number of ‘landmines’ in the future, including clinical research in India, pharma company mergers reducing R&D expenditure, and problems with quality resulting from the rapid expansion of CROs. He concluded that it is time for small- and mediumsized CROs to consolidate or risk going bankrupt. Those organisations that stay the same, especially the smaller players, may well fail.

While the links between sponsors and CROs is often the main focus of this annual event, Partnerships in Clinical Trials is arguably something of a misnomer as there is little discussion about partnerships between investigators and patients. However, this was touched on in a presentation by Trudy Lobban – a sufferer of atrial fibrillation – who founded a patient association and then worked with the pharma industry to pursue clinical trials in her pathology.

Outsourcing Models

Day two also broke into four workstreams, this time covering outsourcing models, relationship management, patient recruitment and quality. I chose the first one, in which a number of companies spelt out what their outsourcing model was, from functional outsourcing, to complete outsourcing of particular phases, to a more strategic approach.

With few exceptions, no one company said they had adopted a unilateral model, but instead favoured a mixed model with elements of all three of these options, based on the time available and their current strategic thinking.

One interesting discussion related to what CRO providers are asked to do, compared to what they are actually able to implement. The CROs felt a significant number of protocols today are too complex and that many of the requests for proposals are impossible to complete. One speaker noted that 35 per cent of data points are used in registration, and wondered what happened to the other 65 per cent.

CROs stressed their staff wanted to do a good job, but that many clients did not give them sufficient space. Likewise, they noted that, in practice, investigators really ran the studies, and were the true partners of the pharma industry. In the ensuing debate, sponsors urged CROs to show clients what they needed, not what they wanted, while CROs pleaded for time to show their strengths.

Need For Change

PCT is always a good place to catch up with the current thinking on partnerships between pharma companies and the CRO community – and this year’s event was true to form.

There were many thought-provoking discussions in the conference, while the exhibition running alongside also proved a success. One notable innovation this year was a series of interactive roundtable sessions in the exhibition hall. Here, topics such as leadership and negotiating skills, virtual relationships, how small companies can get noticed, contract negotiation and cost management were discussed by small numbers of people and a senior ‘mentor’ from industry or the contract research world.

However, if there is any conclusion to be drawn from the event, it is a rather negative one: that many delegates think that nothing much seems to have changed in this area of partnerships, and that progress towards a truly strategic approach is painfully slow – and may not even be fully achievable. Roll on next year’s PCT in Barcelona to reignite the debate.

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