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CROs Heed the Crisis Call

The CRO market is growing despite economic climate. 

By Rebecca Palmer

May 19, 2009
| The CRO market has grown dramatically over the past decade, with world-wide revenues estimated to be $17.8 billion and an annual growth rate of around 15% since 2006. Yet, there are hurdles ahead as pharmaceutical partners endure mergers, lackluster pipelines, generic competition, and rising health care costs. Costs must decrease, and emerging scientific models must be reevaluated for biological relevance, cost efficiency, and international policy compliance.

The economy could be cause for worry, but John Lewis of the Association of Clinical Research Organizations disagrees. “Initially, we saw a slowdown in research into early 2009, but eventually, that work must be done. I think we will see pent up demand. The focus will be on core competencies—the pharmaceutical companies will do what they do best, the drug discovery and the marketing, while they leave the middle piece, the development, to us. So signs of increased outsourcing look good.” 

Indeed, Watertown, Mass.-based Apredica is seeing “unprecedented demand” according to its president, Katya Tsaioun. As pharmaceutical companies tighten their belts, CROs can expect additional work. Indeed, Covance’s Tom Privette, VP strategic partnering, sees “increased urgency”, plus a need to do “more with less” and the requirement to “access more expertise.”

But the economic crisis has hurt CROs in other ways. Tsaioun remarks that many of Apredica’s customers have collapsed due to their failure to obtain funding. “A specter of looming insolvency [has been cast] over much of the industry,” she says. “If investment funding doesn’t start flowing back into the industry soon, by the end of the year things could turn for the worse.”  PPD Inc.’s chief operating officer William Sharbaugh agrees, saying, “tighter credit markets have caused some biotech companies to cancel or delay projects to conserve spending. The overall number of biotech companies is decreasing because of acquisitions or bankruptcies.”

The Obama Administration’s stimulus bill could be just what the CROs ordered. Tsaioun comments: “In the past month [since the stimulus bill], we’ve had more requests for consulting, service proposals, and support letters for grant applications than we had in the entirety of 2008.” Covance’s Privette thinks that more understanding about the stimulus bill is needed, but the company that won “Best Contract Research Organization of 2008” for “best-in-class services to support vaccine development” at the 2008 World Vaccine Congress, is heartened by the promise of enhanced funding for preventative medicine.

Turning to E-Tools
To help serve their customers’ needs of efficiency while maintaining a global reach, CROs are turning to electronic tools to share data with sites throughout the world. Covance, which has touched more than 25% of the world’s clinical trials, offers clients the opportunity to build their own or buy pre-made electronic data capture (EDC) solutions to fit any kind of study, company strategy, or budget. These solutions allow data to be collected and aggregated for an entire project, regardless of geographic location or tests performed. Covance’s clients can access information within 24 hours, from more than 100 countries. PPD has used EDC solutions in trials for over six years, equaling more than 200 clinical trials, according to Sharbaugh.  PPD prefers Oracle’s RDC Onsite 4.5.3, which allows for faster data entry through a web-based interface.

The Internet, too, plays a large part. Long-distance communication made possible by the Internet permits Apredica to speak to their clients throughout the study process in areas such as India, Australia, and South America. As Tsaioun says, “The common perception is that outsourcing is a one-way street, but that’s not so. When customers become globally convenient to work with, customers focus on what company is the best provider for them.”

The economy is not the only challenge facing CROs. Governments are applying their own pressures on the market. Policy makers around the world are bending to public pressure to reduce animal testing. The European Union, for instance, has a mandate that no consumer products (e.g. shampoo, cosmetics) tested on animals can be made or marketed in Europe after 2012. Apredica’s Tsaioun says “our industry is in the massive process of replacing expensive and imprecise in vivo testing with more accurate and less costly tools…  since the mid-1990s we have been making dramatic, rapid advances in in vitro testing.”

Yet pharmaceuticals that treat life-altering and sometimes fatal diseases are a far cry from cosmetics. Despite public aversion to animal testing, drug makers must ensure their products are safe. Any new testing model must give strong indications of efficacy and toxicity prior to commencing clinical trials. More work clearly needs to be done in order to ensure that non-animal based models are as predictive, or more predictive, than current animal-based models.  Tsaioun agrees and says, “Clinical candidate selection needs to happen not only based on efficacy but also on strongly supported in vitro tests that are predictive of human clinical outcomes.”

Despite the stiff challenges faced today, CROs are finding strategic solutions to bridge the gap between pharmaceutical companies and the public.

This article also appeared in the May-June 2009 issue of Bio-IT World Magazine.
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