Why Biotechs Should Invest in Good Outsourcing Management of CROs

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The relationship between biotechs and their CRO partners has been long in the making. These days, a collaboration with CROs is seen as a standard in the drug development industry. However, the management of drug development partners and providers can be highly challenging for biotechs. This is where outsourcing expertise can make the difference between success and the painful alternative.

In recent years, the growing success of the drug development industry has resulted in impactful changes for contract research organizations (CROs) and biotechs. Through mergers and acquisitions, CROs continue to grow and expand their scope of drug development services. 

As large CROs have acquired regional capacity or specialist services, the number of smaller, independent CROs has fallen. On the other hand, smaller CROs are becoming more specialized in specific areas of drug development, such as clinical trial supplies or IT. 

Additionally, the industry is seeing a third category of providers emerging. This group focuses on IT platforms that, especially in the current Coronavirus situation, can rapidly adapt and interact with sites. 

Lacking resources, biotechs rely heavily on CROs

Richard Scaife, PCMG
Richard Scaife, Managing Director at OM360 Outsourcing Consultancy & Chairperson at PCMG

But what does that mean for small biotech companies? In the past, biotechs often lacked the resources to move beyond phase I and usually partnered early with large pharma companies. 

However, a combination of scientific advances and the availability of investment funding has fuelled the successful growth of the biotech industry into later phase trial management. 

“What this has done is to push biotechs into having to manage clinical trials without the resources that large pharma companies take for granted,” explained Richard Scaife, Managing Director at OM360 Outsourcing Consultancy and Chairperson at PCMG. 

“In-depth, project-level knowledge is essential to manage external suppliers effectively and to meet investor expectations. Smaller, investor-funded biotechs lack internal capacity and capabilities, and subsequently, risk over-reliance on CROs.”

Investing in CRO management

Now comes the challenge: The huge budgets and commitment of what can be a biotech’s only product, means CRO management should be seen as a high-risk investment. Commonly with a medical science focus, a biotech’s management team has limited time and resources to fully manage this risk.

“Managing CRO outsourcing is a complicated task, intensive task,” Scaife said. “Once you have made your selection, there’s not enough time or budget to change your mind when projects are underway.”

As the chairperson of PCMG’s committee of cross-company outsourcing experts, Scaife sees the potential for biotechs to learn from PCMG’s pool of outsourcing knowledge and experience. 

Outsourcing expertise for CRO management 

outsourcing, inhouse, outsourcing management

PCMG was originally founded in 1994 by a cross-company group of pharma managers involved in contracting external suppliers, who wanted to understand how best to work with CROs, which were quite new, but growing at the time. 

Scaife joined PCMG in 2006. He is the current chair of a 12-person committee of volunteers, who lead the association’s activities on behalf of about 130 biotech and pharma members across Europe. 

“PCMG enables the outsourcing community to evolve best practices and raise standards of outsourcing management in clinical development,” Scaife explained. 

The team shares its knowledge through PCMG tools and templates, intensive training courses, workshops, webinars, and conferences to enhance the value of the outsourcing specialization within the life science sector.

“An all-round skill base is essential to successfully support the clinical operations team at strategic and tactical levels. CROs benefit hugely from experience working with different clients, and PCMG membership enables a similar breadth of key lessons learned,” Scaife added.

Choosing the right CRO is key

Whether large pharma or small biotech, the essentials of outsourcing are the same. The challenge starts with planning sufficient time to find the most suitable partner. A biotech must decide whether it wants to work with a large, full-service CRO or smaller more specialized CROs. 

“There’s a tremendous risk in taking the ‘easy option’ and trusting that a big CRO’s extensive global resources and capabilities provide assurance of successful trial conduct. Are those big CROs really focused on small biotechs? Like with all CROs, it depends on who you get, but also how you intend to work together.”

That is not to say that all large CROs are not committed to working with small companies. As with any choice, well defined and developed needs and expectations have to be understood in advance. 

Beyond specifications, the cultural fit is equally vital but doesn’t come from a written proposal. “It’s called a business relationship for a reason,” said Scaife.

The consequences of neglecting CRO management 

time loss

“Signing a contract with a CRO is just the beginning of the relationship, nothing is locked down,” Scaife warned. “If a biotech doesn’t have the resource to fully control study planning, pre-study feasibility, set up timelines with a realistic budget forecast, protocol development, and how to work constructively with the CRO, higher costs and longer timelines are a near certainty.”

Good Outsourcing Practice can steer projects in the right direction and plan for success rather than conflict. This can ultimately result in trying to fix the problems by replacing the CRO. 

“The worst-case scenario – which I’ve seen – is a complete fallout with the CRO where another CRO is brought in to the rescue rather than preventing or effectively resolving the issues,” Scaife added. “This costs even more money and becomes far more complicated because you need to manage the interaction between the original CRO and your rescue CRO.”

The long term consequence of this scenario is a delay in the study. “Time is the enemy, whether developing a new treatment for commercialization or for acquisition, the longer it takes, the lower the value of the product. Time, cost, and quality are always the three things that can suffer if you don’t get your CRO management right.”

A good relationship between CROs and their biotech sponsors is important

To avoid the risk of failure, biotechs should think about whether they have the time and resources to manage and work effectively with the CRO. If not, they should consider whether they can train-up internal workers or recruit experienced staff.

Experts, like the committee and membership of PCMG, understand the value of mutual trust between a CRO and their biotech sponsors. What sponsors often don’t realize, says Scaife, is that they have a shared responsibility towards their CRO colleagues to build a constructive and open working relationship. Needless to say, this would benefit both parties. 

“I’ve heard the term ‘the client from hell’, the one CROs dread getting a phone call from because it’s such an unpleasant experience,” Scaife explained. “If you are going to succeed as a biotech, you want to have full engagement with the people in the CRO. It’s always easy to blame somebody else when things don’t work out. But it takes two to tango, it really does, and that’s where the trust comes into it.” 

An ultimate biotech goal is successful due diligence

For a biotech, the relationship they have with their CRO partners and other providers is essential in the long term. Scaife explained that, ultimately, every biotech will be subject to due diligence. 

“What happens to a biotech in the end? It will take products to commercialization or it will sell the product to a pharma to progress the development. Whatever they do, they will be subject to due diligence.” 

“Due diligence for either investors or potential acquisitors is incredibly intensive and time-sensitive. Outsourcing-related questions will include, ‘Where are your contracts? How did you negotiate these contracts? How did you select those providers?’ They need to know everything. At this point, your outsourcing management becomes even more important.”

The future of R&D outsourcing management

In the future, Scaife believes the value of good outsourcing practice within procurement frameworks will become increasingly important in the drug development industry. While biotechs only have finite resources and small in-house teams, these principles and practices have a valuable role in helping them effectively manage their CRO partners and other providers. 

In fact, PCMG is about to launch an Outsourcing Freelance Directory, which will be ideal for biotechs. “One of the best things about CROs is that these people have seen what different companies have done and how well their practices do or don’t work,” Scaife concluded. 

“Biotechs can tap into that experience, rather than relying on their own experience, which can have a limited perspective. The same rule applies to the increasing number of freelance outsourcing experts as it does to CROs. They have a broader experience, are usually more senior as well, and are not intimidated by changing companies and working in different environments.”

PCMG has canceled the 2020 Annual conference due to Covid-19 constraints. This, however, provides an opportunity to join PCMG LIVE, a free interactive online event with a difference, from 24-26 June. For details of this event and more about PCMG activities and membership, contact or check out PCMG’s website for more information!

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