The shifting roles of CROs25 January 2024
The dial has been shifting for some time now on how much research and development work is carried out in-house by pharmaceutical companies. While outsourcing in the industry was once synonymous with manufacturing at scale, much of the focus of contract organisations is now on assisting companies with drug development, hence the commonly used moniker CRO, or contract research organisation. The role of the CRO isn’t always monolithic however, and whether pharmaceutical companies opt for a full-service approach with their clinical trials, or cherry pick competencies to integrate within their own trial workflow, will depend on a variety of factors. Oladimeji Ewumi discusses what these are with Dave Latshaw II, cofounder and CEO of BioPhy, Penelope Przekop, CEO of PDC Pharma Strategy, and Mary Jo Lamberti, research associate professor at Tufts Center for the Study of Drug Development at Tufts University.
Drug development is unique from other mainstream production processes. It involves extensive research, preclinical testing and clinical trials conducted under rigorous regulatory scrutiny. For some companies, the means to conduct research in-house is simply not financially viable, but even for those who do have the capabilities, the comparably low cost of outsourcing can be an attractive option. As such, it’s common for pharmaceutical and biotechnology companies to farm out specific or entire aspects of their research and development process to CROs. This allows sponsors to focus on other core competencies, such as drug discovery and marketing. On the other end, CROs help the pharmaceutical industry navigate the ever-evolving landscape of clinical research and drug development – including the various moving parts of clinical trials – by providing specialised expertise in the use of resources, data capabilities, global reach and efficiency.
Recent works by the Tufts Center for the Study of Drug Development (CSDD) gave some insight into the performance and growth rate of the CRO market. The report revealed that the 10 leading CROs generated $34bn in 2022, which represented an estimated 69% of total revenue spent on contract clinical services globally. The report also looked at growth over the five-year period between 2017 and 2021, in which total revenue increased by 12%, with a 17% growth rate observed between 2020 and 2021 specifically.
In terms of market penetration, a 2017 analysis from CRO PAREXEL suggested that about 64% of all clinical development was outsourced, and that was after a 2015 prediction from Research and Markets forecasted that 72% of clinical trials would be outsourced by 2020. Where the dial actually landed in 2020 and beyond is unclear, but we can safely assume that more than half of all clinical trials are currently outsourced, and it could even be closer to three quarters. This statistic underscores the immense trust and reliance sponsors place on CROs in the pharmaceutical research and development ecosystem.
“Opting for full service versus functional service is often decided on a case-by-case basis and depends on the internal capabilities of the company, willingness, and ability to allocate them, and overlap with the needs of the trial.”
Dave Latshaw II
Full service versus functional service
In the dynamic landscape of modern clinical trials, sponsors face many decisions. Importantly, they must strategically decide on involving a CRO partner early, select the most suitable outsourcing model, and evaluate pertinent factors to inform their choices. “Opting for full service versus functional service is often decided on a case-by-case basis and depends on the internal capabilities of the company, willingness, and ability to allocate them, and overlap with the needs of the trial,” says Dave Latshaw II, CEO of BioPhy.
In past decades, these two primary models have characterised the approaches to outsourcing. Full service was the most common, but that’s becoming less so as large pharmaceutical companies bring more R&D back in-house to retain regulatory vigilance over a growing number of complex trial designs and an escalating volume of data points. “The proliferation of modalities away from primarily small molecules has created an environment where niche expertise is needed to work with these new technologies,” explains Latshaw II, who spent several years as AI drug development lead at Johnson & Johnson before taking on his executive role. “There is naturally less familiarity with those technologies among CROs until they become more mature and gain experience, limiting their ability to be full service, hence the shift to more specialised functional service,” he adds.
Penelope Przekop is CEO of PDC Pharma Strategy, a consultancy focused on areas of compliance known as GxP (Good x Practice), as well as quality assurance (QA) during trials. For her, another reason for the move away from full service to functional service outsourcing models has to do with CROs not meeting the industry’s expectations. “As sponsor companies engage with CROs in areas of expertise they lack in-house, they gain oversight over activities outside their areas of expertise,” says Przekop. GxP vendors cover Good Manufacturing Practices, Good Laboratory Practices, Good Pharmacovigilance Practices and Good Clinical Practices. Przekop explains that although there’s a growing trend of large pharma companies bringing R&D back in-house, many of the highly experienced pharma professionals with the knowledge to provide oversight on GxP compliance and quality assurance are approaching retirement, which is leaving a gap in knowledge that needs to be filled
Choosing an outsourcing model
Whether sponsors opt for a full service or functional service provider will always depend on a number of factors, with cost being a major consideration. It’s common for (bio)pharmaceutical companies to thoroughly assess the overall budget and cost structure, including potential hidden costs associated with each model.
In addition, a clinical trial project can change due to evolving scientific insights, regulatory adjustments, or emerging patient needs. These variables require a nuanced approach to project management that prioritises adaptability.
“The strategic selection of an outsourcing model must align with the industry’s evolving landscape, ensuring adaptability and robust scalability to effectively address changing priorities,” says Latshaw II. “A flexible outsourcing approach can accommodate dynamic shifts in project focus and seamlessly expand to meet the demands of growing projects, without compromising efficiency or quality.”
Speak to Mary Jo Lamberti, research associate professor at Tufts Center for the Study of Drug Development at Tufts University, and it becomes clear that the ongoing trend toward decentralised trials continues to influence the outsourcing decisions of pharma companies. “In a survey we conducted last year, sponsor companies look to CROs to adopt a proactive approach to decentralised clinical trial (DCT) adoption,” she says. “This requires CROs to take the initiative and anticipate needs or challenges before they arise. We need to revisit these qualifications in a follow-up study, although therapeutic expertise and prior experience with a CRO are still very important to pharmaceutical companies, especially as organisations implement more remote and virtual trial approaches,” she notes.
Assessing CRO expertise and choosing an outsourcing model, according to Przekop, can depend on several factors, but the therapeutic area and the study phase in particular stand out. “Those two factors often drive the complexity of the protocol and the types of patients involved, in terms of their health profile,” she says.
Latshaw II, for his part, agrees that the choice of outsourcing model will depend a large amount on the therapeutic area of the trial. “In full service, sponsors want to ensure that the outsourcing partner has domain expertise and a proven track record of navigating the clinical trial spectrum from study design to execution,” he says. “In functional service, where expertise is limited to a particular niche area, the outsourced functions remain in synergy with the therapeutic goal.” By offering specialised services and expertise in distinct areas, specialist providers ensure that specific trial functions are meticulously executed with a profound understanding of the therapeutic, regulatory, and compliance landscape. This contribution can significantly accelerate the pace and enhance the cost-effectiveness of studies.
Highlighting the subtle terrain of outsourcing models, the Tufts study mentioned oncology as a driver of the full-service approach, while functional service outsourcing was synonymous with non-oncology trials. But is there something unique about oncology trials that lends itself better to this approach? “Oncology trials are some of the most complex and often involve the most ill patients,” Przekop says. “This requires highly experienced professionals to execute protocols. It also means that a high number of serious adverse events and fairly predictable outcomes are to be expected, whether related to the investigational product or not,” she explains. “As a result of these factors, Investigator Brochure updates are more complex, as are the statistical evaluations.”
In oncology trials, full-service CROs are popular because such complex studies have more intricate protocols, as Latshaw II points out, requiring “specialised expertise in patient selection and biomarker analysis. The full-service approach consolidates everything and ensures continuity despite the added complexity.” They’re handy for companies lacking extensive clinical development infrastructure in these areas, he adds.
Optimise AI and QA functions
Smaller companies without specialist research expertise naturally look to outsource their research programs.
However, reports from McKinsey & Co. suggest such biotech businesses are dissatisfied with the offerings of the big CROs. They feel they do not provide enough strategic advice or adequately support the integration of technology point solution providers and that there is a “misalignment of incentives,” as the company noted in a survey-led report. Even as biotech and biopharma companies continue to fuel the growth of CROs, there appears to be work for CROs to do to better meet their expectations. Latshaw II believes that following the barbell strategy – an investment concept that suggests that the best way to strike a balance between reward and risk is to invest in the two extremes of high-risk and no-risk assets while avoiding middle-of-the-road choices – can position CROs to efficiently meet the needs of sponsor companies. “Look at the barbell strategy: either become a niche functional service provider or use the whole-stack CRO approach,” he says. “Try incorporating the latest and most remarkable technologies into your processes, because even if you haven’t been asked, ‘What are you doing with AI?’ you will be! Consider performance-based contracts to put your expertise where the money is.”
As sponsor companies engage with CROs in areas of expertise they lack in-house, they gain oversight over activities outside their areas of expertise.”
To better optimise CRO use, Latshaw II advises that biotech and pharma companies be more objective in selecting CRO partners using a data-based approach rather than relying on past personal and institutional relationships. “Going with an organisation because they performed well in one engagement does not guarantee success going forward, and there are likely better potential partners out there you aren’t even considering,” he says. “Past performance is no guarantee of future results.”
For Przekop, evaluating CROs on their QA credentials should be a priority for sponsors. “Always remember, a CRO is as good as its QA function, and ensure that someone qualified makes that decision,” she says.
The approximate percentage of global spending on contract clinical services ($34 billion) in 2022 by the top ten CROs
Tufts Center for the Study of Drug Development
As with so many sectors transformed by the use of data to lead decision making, successful CROs are likely to be those that can demonstrate a history of competency in numbers. But as the pharma industry continues to grow in the direction of advanced therapeutics developed mostly by smaller biotech companies, the CROs that lead the market will be those that can adapt their services to accommodate what will be their main customers in the future.