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Conflict of interests halt Seroxat inquiry

Published on 24/10/03 at 04:32pm

If you were to ask leading CRO executives they would tell you that blue chip pharma companies outsource their critical clinical research studies to them. Ask the same question to leading pharma executives and they will tell you they never outsource critical pivotal studies to the CRO industry. Different perceptions mean both are actually telling the truth.

As outsourcing budgets have grown (about $10 billion in 2001), so have global CROs, but have they grown from being small, flexible and customer focused to being massive, inflexible and internally focused with greater interest in satisfying shareholders than customers? Growth in the sector has been exponential and the increased use of technology has allowed smaller niche service organisations to compete with the global companies. Sharing information globally within project teams avoids the need to replicate talent in each and every location and country. Similarly, an increasing trend towards niche providers developing networks and alliances with competitors is allowing them to compete increasingly with the large CROs. However, they cannot compete with the economies of scale and the preferred provider agreements that exist between the world largest pharma companies and the global CROs, although more formal networks might facilitate this.

Forecasts predict that the CRO market will total more than $16 billion by 2005, so why have the last five years been so tough for the service sector, and in particular clinical CROs? For a long time the pharma sector has seen CROs as a necessary evil, only used if there was insufficient internal resource. At times, the sector has exacerbated this through the way it secures business on price alone, without focusing on quality or added value. More importantly, CROs have struggled to attract and hire top quality professionals needed to become centres of excellence.

Staff retention

Staff retention remains a critical issue, one that CROs have reacted to by promoting from within. This gives projects and their management a perception of continuity. But hiding behind multi-coloured Gant charts is no substitute for a lack of experience. CROs that remember that perception is reality and make project management a priority are seeing a positive impact within the marketplace.

All too often, CRO staff report that they are treated with disdain and are considered disposable. CROs must recognise that they can only achieve their objective of being the best by seeking to recruit leading talent. Once identified and recruited, these individuals must be nurtured, developed and given the flexibility to pursue personal growth objectives along with those of the organisation. Talent often comes with a low boredom threshold and these individuals may need scope, variety and the opportunity to stretch themselves, not just repeat the same tasks over and over because they are good at them.

Within their recruitment strategy, CROs must look ahead and hire for the future of the business, rather than for their needs today. While balancing resources is a delicate and difficult matter, recruiting behind the curve ultimately results in short term decisions. Their talent pool will change and soon the traditional look of a CRA or a data manager will be different and the companies that invest will benefit. Project management skills will be at a premium and again companies will need to hire more wisely and invest in training and development, not relying on the employees to learn while on client work. Few companies know what makes a good CRA, a good project manager or data manager. The sooner that these are qualified and quantified, the stronger an organisation will become and the more rapidly they can move towards best practice in all areas.

True partnering?

Despite much discussion, there have been limited numbers of genuine examples of partnering (as opposed to ut pricepreferred vendor deals) between CROs and pharma sponsors. We have been moving towards partnership for almost 10 years, but are still no closer.

Are the goalposts moving or are we moving in the wrong direction? Perhaps it is both and another reflection of the differing expectations. Similarly, there is no doubt that the sponsor ability to accurately communicate its expectations, and then stick with them, requires further consideration. There is also the danger that these partnership relationships will merely replace the preferred provider relationships of the 1990s without any real breakthrough that benefits both parties. In order to be of maximum benefit on both sides there must be increased trust and mutual respect. While risk sharing is becoming more common, this may at times be a misnomer, with contracts primarily developed on a cost and materials basis, then adapted to one where the CROs take increased visibility and risk.

One area that must be addressed is establishing true parameters for measuring the performance of CROs. There are many horror stories where milestones have not been achieved but should this always be the sole responsibility of the CRO? And were the objectives and performance requirements clear at the outset?

As the big CROs continue to grow and add greater diversity to their service offering, smaller niche CROs have a difficult decision to make: do they remain as successful niche organisations or do they look to expand through growth or acquisition to become a major player in the market? Some niche players have destroyed their own business by embarking on the latter route while others have been highly successful. The real question is where do you want to position your business and how do you wish to work with your customers?

To put it another way: do you put revenue before relationship?

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