Drug development strategies are shifting as part of a massive effort to offset extraordinary market challenges the pharmaceutical and biopharmaceutical industries face. The days of major patent expirations are closing in. According to Datamonitor, $110 billion in global sales are at the mercy of generic competition for the top 50 pharmaceutical companies through to 2014. Additionally, the cost, complexity and risk associated with bringing a new drug to market are fast exceeding industry means to sustain them. Pharma and biopharma must look to emerging markets and cost-saving outsourcing initiatives with CROs to drive growth.
According to Tufts CSDD research, annual growth in drug sponsor spending for contract clinical services during the last decade has outpaced annual increases in global spending on new drug development, 13% vs. 9%. CRO revenue was projected to total $20 billion in 2010, representing approximately one-third of total pharma and biotech R&D spending.
Globalization continues to play a key role in the search for drug development efficiencies. CROs are helping sponsors enhance productivity efforts with their global footprint and regional expertise. CRO headlines in previous years have been dominated by expansion efforts-global and service oriented-however, this past year in particular, they've been dominated by major partnerships and alliances with big pharma/biopharma that are greater in scale, longer in duration, and more diverse than ever. CROs also continue to add, enhance and expand services aimed at improving the development process through enhanced data, providing advisory services in areas such as commercialization and partnering on biosimilar development projects.
Although the majority of all clinical trials are still conducted in the established markets of the U.S., Canada, and Western Europe-according to clinicaltrials.gov, approximately 53% of clinical trials are performed in the U.S., 24% in Europe, and 23% in Asia, Latin America, Africa and Australia-sponsors are increasingly seeking out emerging markets in Asia, Latin America and Eastern Europe for greater drug development productivity and efficiency. While driving down overall development cost is an important factor, the largest benefitof globalized trials by far comes from the potential for faster time to market with reduced development time, which in turn provides an opportunity for a longer post‐approval patent term.In a report, Value of Insight Consulting, Inc. estimates that it would take approximately 5.8 years to fully enroll all currently open Phase III cancer trials if only U.S. locations were used, as compared to 1.9 years using both U.S. and global trial sites. As a result, many emerging markets in Latin America, Central and Eastern Europe, and Asia are experiencing steady growth. Which markets hold the most potential for success and further investment?
"We are seeing significant growth and interest across all of the emerging markets but the Asia/Pacific region, particularly China and India, are leading the way. Growth in this regionis explosive," said Stephen Cutler, Ph.D., president and chief executive officer of Kendle. "Analysts project the pharmaceutical market in China will reach $200 billion by 2020, making it the second largest in the world. A recent report from GBI Research notes that it takes only one-third of the time to recruit patients in India, and the average number of patients per site is five times higher when compared to mature markets," Dr. Cutler added. In the last two years, Kendle has opened multiple new offices in the region, including two in India, three in China and one each in Malaysia, Thailand and the Philippines.
Paul Colvin, executive vice president of global clinical development, PPD, Inc., added, "The BRIC countries (Brazil, Russia, India and China) are considered the engine of future growth for the pharmaceutical industry and represent a shift in global economic expansion away from traditional, developed countries to countries with newly advancing economies. These countries are key locations for future clinical studies, and pharma companies continue to expand their drug discovery, development and commercial programs in each of the BRIC countries. Together, these countries have more than 40% of the global population, and from 2005-2008, no other emerging country had more industry-sponsored Phase II-IV trials than Brazil, Russia and India. Yet, China and India, the two most populous countries, conduct only 6% of global research, which demonstrates that the BRIC countries are poised for significant growth."
Although Asia has seen significant growth and investment over the past several years, Mr. Colvin noted, "Countries in Central and Eastern European are favorable emerging destinations as the region has grown significantly with advanced technologies and infrastructure from developed neighboring countries such as Germany, France, and the UK. We are now seeing this region as a main destination for conducting trials in therapeutic areas like hematologic cancer, lung cancer, arrhythmia, movement disorders, rheumatology and multiple sclerosis. Because of a centralized healthcare system, it requires fewer sites to recruit large numbers of patient groups." Clearly each of these emerging markets holds potential and has significant value based on the various needs of drug developers. However, measuring success is a bit more elusive.
Challenges & Transformation
While growth is explosive and investment is great, conducting trials in emerging markets involves continued challenges around standardization, investigator experience, delays, and disparate regulatory authorities. These markets also represent new and changing roles as sponsors seek opportunities and certain hurdles are overcome. "Key challenges with conducting trials in emerging markets include investigator experience and site readiness. Many governments and regulatory authorities, however, are working to cultivate sites that are compliant with ICH-GCP guidelines," said Josef von Rickenbach, chairman and chief executive officer of PAREXEL International. According to Dr. Cutler of Kendle, "The biggest challenge associated with working in emerging markets is obtaining on-the-ground expertise and experience. Competition for talent is fierce and requires a commitment to training, rewarding and retaining skilled professionals." With the growing demand to run more and more clinical trials in these emerging markets, this challenge in particular, is likely to persist.
Interestingly, the basis for conducting clinical research in emerging markets is shifting to satisfy broader development and commercialization objectives. "As the emerging markets mature and become a central part of the development and marketing plans for drug candidates, we are seeing a more proactive and planned shift of clinical trials to these markets. Emerging markets clinical research is quickly shifting from rescuing ongoing studies to becoming the cornerstone of some development plans," said Dalvir Gill, president of late-stage development at PharmaNet.
Dr. Cutler of Kendle agreed, "The biggest change is the volume of work now entrusted to emerging markets. For example, we are seeing customers place entire Phase II trials in emerging regions before going global with larger Phase III programs."
Many of these markets also have growing middle class populations in need of western medicines and sponsors are seeking commercialization opportunities in certain regions. "Whereas previously there was more focus on meeting demand for emerging geographies to be included in global product development strategies, now there is increasing interest in conducting clinical research in emerging markets to obtain market registrations for certain countries. Furthermore, there are more regional multinational and local studies being conducted on a country-by-country basis in emerging markets," said Mr. von Rickenbach of PAREXEL.
Also, key obstacles associated with the conduct of trials in emerging markets-namely poor technology infrastructure and language barriers-are now changing with the use of eClinical trial solutions. According to Graham Bunn, Medidata's vice president of Partnerships & Alliances, "There is now a good supply of clinical trial trained sites and ITinfrastructure is often superior to that in the Western world. Moreover, eClinical trial solutions like EDC, IWRS, clinicaltrials management systems and sophisticated trial reporting tools have solved many of the language and project management difficulties associated with running trials all over the world. Cultural differences obviously remain, but most countries are falling in line when it comes to a common understanding of GCP, 21 Part 11 compliance and ICH."
Partnerships & Alliances
The current business climate in the industry is challenging pharma and biopharma companies to rethink their operations and as a result, transform their approach to outsourcing. They must learn how best to build alliances with CROs as part of a long-term drug development strategy, and as part of a solution to their cost and R&D woes.
"The CRO/sponsor relationship grew up in times of high profitability and therefore there really wasn't very much of a focus on operational efficiency. They didn't need to because the top line would take care of everything. That's no longer the case," said Adrian McKemey, practice leader for product development at Quintiles Consulting Group. Now sponsors are finding themselves in positions where they have to cut development times and cost by as much as 30% and 40%. Mr. McKemey described the industry's evaluation of its operations as a pyramid. "At the top there's portfolio risk, in the middle there's operational risk, and at the bottom, there's resource risk. Basically the whole industry has carried too much risk at three levels for too long and now structurally they're discharging that risk. All of the changes that are happening to CROs are a result of the industry beginning to discharge that risk."
What's fueling these alliances of late, and which models may prove most successful? Whether it's the cost and complexity to develop a new drug, the financial crisis, or the generic challenge, in the end pharma companies must boost productivity and get their financials in order. Vince Aurentz, executive vice president of Customer Solutions at Quintiles, said, "I think there has been a bit of a perfect storm that has brewed in the industry, and many companies are desperately trying to solve the R&D productivity issue. There's a challenge on innovation, an 'arms race' in the industry, where pharma companies have scaled massive research organizations that just simply haven't been able to bring enough novel compounds to market. All of these things are coming into play at the same time and they are faced with the fiduciary responsibility. They have to figure out how to continue to bring value to shareholders and to their customers. That requires them to make fundamental changes."
Dr. Cutler of Kendle added, "With the average cost to bring a drug to market well over one billion dollars, efficiency and cost savings are the real drivers of partnership/alliance relationships. Becoming familiar with our customers' systems, culture, metrics, expectations, etc. through these longer-term partnerships, accelerates start-up times and minimizes administrative, training and set-up costs. Long-term partnerships afford both the CRO and the sponsor the opportunity to develop and track metrics around key performance indicators over a longer period of time, more accurately assessing the true value of the partnership."
Building an operational model based on the best practices of each partner in an alliance is one attempt to resolve productivity challenges. Mr. McKemey commented, "The interesting thing is that CROs are being leveraged more and more for their cumulative insights, because we've seen every step of the value process, in every company, in every market. If, as a biopharma company, you begin to mine that intelligence, you can create best of breed: a development program that is more homogeneous, and less heterogeneous than in the past." Whether these alliances of late are on the right track or not, they represent a formidable effort on the part of both parties to improve R&D outcomes.
Sponsors are leveraging CROs broad expertise and capabilities and CROs are taking on more comprehensive pieces of the development process, along with more responsibility. Partnerships are being structured around delivering value to sponsors as opposed to just a task. In addition to the moretraditional development and functional service alliances, we've seen more and more around risk-sharing and biosimilar development. Also, discussions around commercialization partnerships are just beginning to emerge.
"I think one model that's more important now than in the past, is around risk-based partnerships. Some companies aren't able to sustain the growth they've had in the past, and when you don't have the growth, you don't have the same level of investments. Yet they still have pipeline needs, compound needs, and funding needs, and venture capital is more constrained than in the past. So access to capital, and how to look at risk-based partnerships, is becoming much more important. We see that with our customers, and I think that will continue to grow," said Mr. Aurentz of Quintiles.
Another emerging concept is the partnership around commercialization, particularly in markets where sponsors don't have a presence or expertise. "The commercial side is one strategy that's just starting to tip, where sponsors are thinking more strategically and asking, should they be the experts in some countries and should they carry the fixed cost of sales to sell a drug when their pipeline may not sustain that cost? Are there areas they need to move into where they don't have expertise? We can help them to either not lose time or to start to learn and then transition at the right time, to create some flexibility on the commercial side," said Mr. Aurentz.
Regardless of the partnership model, establishing the sponsor's needs upfront is key to the success of these alliances, according to Mr. Aurentz. In all of these alliances there is the
element of need for capability, and the alliance must address that need. If the sponsor is unclear what its needs are, thatpresents a challenge. "Where alliances have gone off track in the past is when you have partners with different agendas," said Mr. Aurentz. "With each alliance, we're trying to take a much stronger step initially to understand the real needs of our customers, because that has changed massively. In the past, you could more easily identify what they needed, whether they need help in a certain country or region, with a specific product, or in a certain area. What I find now is they know they need help and there are some areas they're struggling with, however in many cases, they aren't exactly sure what they need help with."
Mr. von Rickenbach of PAREXEL added, "Strategic partnerships play a prominent role in helping biopharmaceutical companies more effectively meet development and commercialization goals. Critical elements of these relationships include the ability to create value for the sponsor and deliver benefits, such as faster cycle times. To be successful, partnerships must have well-developed governance constructs, open collaboration, a deep level of information exchange, and an outcomes-based approach, focused on sharing the risks and rewards."
The continued challenges with some CRO/sponsor relationships are around clarity of role and expectations. Mr. Colvin of PPD noted, "All relationships must start with trust and transparency. The earlier we are involved in the clinical development process, including creating clinical plans and protocols, the more we can influence positive outcome of a study. Establishing the right processes and metrics lead to successful outcomes for CROs and their partners. The forgotten cost of clinical development is micromanagement and redundancies, and we need to work toward changing that."
Sponsors are starting to loosen the reigns, giving CROs more of the freedom they need to carry out programs optimally. "This increase in management autonomy," according to Mr. Colvin, "has been accompanied by an increase in the level of risk that a provider assumes, as well as better alignment of goals, objectives, and financial structures, allowing for more successful programs."
CRO Services & Investment Trends
In addition to geographic expansion in emerging markets, CROs continue to invest in and provide various services to meet the current needs, as well as anticipated needs of their clients. Among the trends garnering the most attention from the industry's top CROs, are data analytics, advisory services andbiosimilar development. Technology continues to improve the clinical trial process and the resulting data and therefore is asignificant investment area for CROs. Also, providing advisory services is a major trend for CROs. With rapid globalization and the various regulatory authorities, increasing complexity of drug development, and regulatory uncertainty around biosimilars, sponsors are seeking the expert advice of experienced CROs. Finally, interest in biosimilar development is explosive and represents an area that CROs are heavily vested in.
Integrated technologies and data analytics are at the forefront of IT investments for CROs looking to gain added value from their research efforts and EDC systems in order to provide access to important safety data, expedited decision-making and improved processes. "We strongly believe in the power of data, the need for real world data mapped onto to chemical data, mapped onto operational and development data. We see that connecting of data to be the key to speeding drug development. If there's one very large area of investment for us, it's around data analytics. That serves all of the important constituents to drive a business. It helps us to design better operations, design better endpoints, and it helps to position new products optimally," said Mr. McKemey of Quintiles.
There are a number of aspects of the clinical trial process that are increasingly being integrated with EDC systems. Graham Bunn of Medidata said, "CROs are also expected to introduce better trial processes throughout the biopharmaceutical partnership. This has led to a number of CROs leveraging new technology-based solutions around, for example, targeted source data verification (TSDV) to reduce clinical monitoring costs while simultaneously driving up trial quality and patient safety, or streamlined SAE reporting through the integrationof EDC and pharmacovigilance systems and business process reengineering (BPR) within the clinical, data management and safety teams."
Tools and technology have been the most rapidly advancing area, according to Jonathan Goldman, executive vice president of Strategic Development at ICON: "We see enormous potential for the data warehouse as the centralized repository of data from multiple sources. There are many benefits from a single aggregated target for all study data that provides both sponsor and CRO teams with the same, single view of data. Among these is the realtime access to safety and performance data. Review of safety data will increasingly reflect modern medical practice where the electronic medical record has replaced the paper system. Additionally, as more trials use imaging as an endpoint, centralized imaging, either as a repository or for a central read (or both), will become a must-have."
Also, piecing together important trial data is no longer necessary as a result of certain technological advancements. PPD signed an agreement with Microsoft Corp. last year to develop an integrated technology platform that will allow biopharmaceutical companies more efficient management of their FDA-mandated REMS (risk evaluation and mitigation strategies) programs. According to Mr. Colvin of PPD, "This technology is important because there is a need for a robust platform to integrate all REMS Resources , data and information. Companies have previously patched existing pieces of technology together, but this isn't efficient nor does it provide companies with a long-term solution for managing their data. With this platform, clients will have a more integrated, robust platform and greater control of their REMS data to ensure the safety and efficacy of marketed drugs."
Having extensive clinical experience across multiple geographies, in multiple therapeutic areas, across all phases of development, CROs represent a prime resource for advisory services. Through their consulting arms, for years CROs have been helping sponsors navigate regulatory and compliance issues, improve operational efficiencies, optimize pipeline value and reduce infrastructure costs. Now, advisory services for biosimilar development and commercialization are highly sought after and CROs are expanding their consultancies to accommodate this need.
"We are seeing a strong increase for our strategic consulting services especially in the development of biosimilar programs," said Dirk Reitsma, vice president of global drug development at PPD, Inc. "We've received requests from our clients to apply our expertise in biosimilar programs in the areas of appropriate trial design and endpoints specific to biosimilar development, nonclinical comparability, regulatory strategy, statistical design and consulting." As a result of the continued increase in these requests, PPD established a biosimilar development services group aimed at bringing together all of its biologics and biosimilar expertise toward addressing client needs.
Also, at the start of the year, INC Research establisheda consulting division to help clients address the challengesof an evolving global marketplace. "The addition of AVOS Consulting, a high-end operations and financial consulting firm to pharma and other life science companies, to INC Research is a tremendous asset for our customers," said John Potthoff, Ph.D. chief operating officer of INC Research.
Mr. McKemey of Quintiles added, "More and more CROs are leveraging their cumulative intelligence to give advisory services; it's spanning not just quality, regulatory and clinical, it's spanning into commercial. That's one of the reasons why we've put a lot of investment into developing market access expertise within Quintiles." The areas in which CROs can advise their clients appear limitless, so building consulting services are a significant area of growth for CROs.
Whatever you want to call them, the emerging product area known as follow-on biologics or biogenerics, or more aptly, biosimilars, development and commercialization efforts in this area have elicited much attention from various industry entrepreneurs. Whether it's branded pharma or biopharma, generic companies, manufacturers, or even non-traditional players, CROs stand to benefit from these biosimilar ambitions. "We are being contacted by many companies who are either actively developing biosimilars or deciding whether it's an area they want to get involved in. Companies are seeking strategic development advice, and/or support from our clinical operations, bioanalytical services, or imaging businesses," said Mr. Goldman at ICON.
While regulatory frameworks are still emerging in many countries, activity around the advancement of biosimilars is everywhere. According to Mr. McKemey of Quintiles, "It's traditional generic manufacturers, it's in the East and the West, it's the non-traditional players that really haven't been involved with developing, marketing, or selling innovation. It's also the incumbents who are intent on making 'biobetters' as a defense strategy to the progenitor drugs. There's a lot of activity from all three camps. Also, it's traditional biopharma companies that don't have the original IP but can create biosimilars rather readily and market them themselves."
During the course of the past year, there have been many alliances forged around biosimilar development. Samsung has formed a joint venture with Quintiles in its first project in
biopharmaceuticals. Initially, a factory will be built in Incheon, South Korea to produce biologics to treat cancer and arthritis on a contract manufacturing basis. In addition, Merck and PAREXEL entered an alliance under which PAREXEL provides access to global clinical development services for designated biosimilar candidates to Merck BioVentures, a division of Merck.
According to Nancy Gillett, corporate executive vice president and president of Global Preclinical Services at Charles River, "We are also seeing increased interest in the area of
biobetters, which are new molecules derived from an existing biologic product that have been deliberately modified to improve stability, efficacy or safety. Biobetters allow companies to target an established mechanism, safety and efficacy profile but gain the benefit of sales of a new molecular entity. The costs are the same as developing a new biological product, howeverthe chances of successful registration are significantly higher. Existing originator companies are also partnering with companies who have specialized technology such as pegylation to develop biobetters from their original product."
Biosimilar development has inherent challenges beyondthe lack of regulatory framework. In order for a CRO to besuccessful in this area, getting access to patients, speed, and having the right endpoints are essential, according to Mr. McKemey of Quintiles; "Biosimilars are a massive trend at the moment and one of the challenging things about that isthere's probably no bronze metal in biosimilar development. You really have to qualify to enter the race and that means a lot of non-clinical work or CMC work just to truly characterize your molecule. But then, you also have to be fast and accurate."
Among the more outstanding trends, which include globalization and biosimilar development, is the greater depth of partnerships and alliances that have truly engaged the industry. Now that the floodgates have opened in the quest for innovation, it will be interesting to see the results of the various partnerships forged in the past 18 months. One thing is clear, fundamental market challenges faced by the industry are in no way receding anytime soon.
Kristin Brooks is associate editor at Contract Pharma.She can be reached at email@example.com.