Initially, these relationships were transactional and largely centered around clinical projects. Sponsors hired multiple CROs for short-term projects when their internal resources were stretched too thin. These fee-for-service agreements typically covered pathology, biochemistry, statistics, and toxicology. CROs also assisted in conducting clinical trials.
As CROs matured and expanded their level of services, the early days of tactical or transactional outsourcing — not the most efficient way of conducting drug development — gradually gave way to more strategic partnerships that were more comprehensive and mutually beneficial. The range of work being outsourced to CROs also began moving slowly upstream and into somewhat riskier waters.
Biotechs, in particular, played a major role in shaping these changes when they began relying on CROs to develop drugs for their pipelines. The large pharma companies also saw the value of forming long-term strategic partnerships with a small number of CROs, not just for the clinical work that defined a CRO’s portfolio early on, but upstream preclinical projects as well.
For the most part, these relationships have been mutually satisfying, in part because they are so well-choreographed. Moreover, the consistent shared learning — in both directions — has helped CRO partnerships flourish and is a main reason why they have evolved to where they are today. The companies outsourcing the research have found a more cost-effective, efficient way to move their candidates through the preclinical and clinical drug development process. CROs have learned to evolve their capabilities and therefore depth of these relationships based on the considerable expertise of its laboratory scientists while performing vital services for their clients.
So it’s not all that surprising that pharma and CROs are riding the latest wave — discovery research — with a vigor and gusto that might have seemed implausible five years ago. Companies large and small have been strategically using CROs for targeted segments of their discovery work in order to maximize the effectiveness and impact of their own internal resources.
This has primarily involved tapping CROs to provide in vivo and in vitro models, assays and platforms that a drug developer either may not want or cannot afford to maintain in-house. By generating robust, translatable data with state-of-the-art methods, a CRO can offer the kind of unbiased, objective assessment that aids the decision of whether to move a leading candidate forward or shelve it and continue searching for a better one.
CROs aren’t the only entity being tapped to do discovery work, either. Pharma is also turning increasingly to venture capitalists, academic laboratories — where the seeds of many new blockbusters often get sown — and start-ups for help in finding novel targets and novel approaches to discover and develop new therapeutics.
But like any blooming relationship, the partnerships being sown between pharma and CROs to successfully outsource discovery efforts remain, to a certain extent, a work in progress. Face it: it’s one thing to outsource toxicology screenings, metabolism studies, or other experiments that follow well-defined protocols approved by the FDA; discovery, on the other hand, is a far less regulated arena. It’s the biological equivalent of that painstaking search for a needle in a haystack.
The work done during this pre-GLP phase of R&D involves novel compounds that are trying out for those rare spots on the later preclinical and (hopefully) clinical stage. Paradoxically, this less regulated research space can be more challenging as well for pharma and its CRO partners. By necessity, the relationships must be more fluid and flexible due to the different kinds of technology and models that are employed to collect the data that determines whether that novel compound gets the green light.
A Match Made in . . . ?
Chemistry matters — both in science and relationships. A drug company interested in winnowing down an extensive library of experimental compounds designed to, say, inhibit a particular protein or gene associated with breast cancer may ultimately select a CRO to rapidly screen, rank and identify the lead compounds that most closely modify the particular biological pathway, rather than do the high-throughput screening on-site. The success of the outsourcing will inevitably rest, of course, on the quality of the cell-based assays, animal models or other in vitro or in vivo tests that a CRO offers. But it will also hinge on the scientific rigor of the CRO’s team, the ability to deliver accurate, reliable data in an efficient manner, and the open and timely communication with clients.
The complexities of these arrangements aside, the outsourcing of discovery research is growing, not just in the U.S. and Europe, but also in India and China. The trend seems to be particularly energetic among small and mid-size companies, and academic laboratories, that lack the money, space or time to devote to a suite of central services needed to, say, identify and validate a compound. Pharma companies also understand the efficiencies of this model and have begun to consult and collaborate with CROs on basic discovery.
It’s not hard to discern the motivation driving this trend. The Pharmaceutical Research and Manufacturers of America (PhRMA) says it costs a company at least $1.2 billion and 10-15 years to get a new medicine to market. For every 5,000 to 10,000 compounds that enter the pipeline, only one receives approval. Even medicines that reach clinical trials have only a 16% chance of being approved.1
At the same time, R&D budgets are shrinking somewhat due to assorted economic factors that have made the hunt for innovative new products more challenging than ever. While pharma companies continue to invest strongly in research, PhRMA’s 2013 progress report found that R&D spending by its members, after peaking at $50.7 billion in 2010, dropped to $48.6 billion in 2011 and an estimated $48.5 billion last year.2
In an effort to contain costs and streamline expenses, pharma and biotech companies have been relying more on CROs, according to the Tufts Center for the Study of Drug Development (CSDD). The Boston institute estimated that the number of CROs operating in the U.S. between 2000 and 2011 has quadrupled.3 There are now slightly more than 3,200 CROs, with 26% of them offering non-clinical research services. Moreover, in a recent survey of large pharma executives conducted by Tufts CSDD, seven out of nine companies reported that they regularly outsource non-clinical study tasks, primarily toxicology and PK studies. The authors of the Tufts survey said that most major pharma executives perceive CROs to be more cost-effective and time-efficient than their internal teams, although they didn’t appear to be methodically tracking non-clinical outsourcing costs.4
While much of the non-clinical work is downstream from the discovery phase, industry analysts predict the trend in outsourcing discovery will continue upward. Oncology work is leading the trend for outsourcing discovery, with metabolic disease and cardiovascular disease efforts sparking matchups, followed by CNS diseases.
Overall, the future looks bright for all parties involved. One recent report by New York market analyst Kalorama suggests that despite the current unsettled economic environment, the outlook for outsourced drug discovery services remains optimistic. The report suggests that the global market reached $9.4 billion in 2011, a 15% jump from 2010. And the global drug discovery outsourcing market is expected to grow at a compound annual rate of 16%, exceeding $21 billion by 2016, the report suggests.5
Researching the CRO
While partnerships built around mutual interests, expertise and trust will undoubtedly help diversify risk and improve R&D productivity, optimizing the use of CROs requires a bit of research as well. This is particularly true for academic scientists and early-stage biotech companies that may be more inclined to outsource discovery yet have less expertise than large pharma company in the basic drug discovery process or in dealing with CROs.
A recent review in Nature Reviews authored by a panel of 12 scientists offers tips for academic labs and small biotechs on how to find and work with a CRO.6 The panel, which was convened by the Alzheimer’s Drug Discovery Foundation in New York, said determining when to use a CRO is just as important as how to pick one. For instance, the decision to outsource discovery to a CRO should be driven by factors that include the need for expert guidance in drug discovery science, technical expertise beyond their own in-house capabilities, and time and cost efficiency.
As we all know, the community of CROs comes in different sizes and shapes. Some are designed to be global, full-service providers that offer a kind of soup-to-nuts approach particularly attractive to large pharma companies. Their large multi-disciplinary staffs have comprehensive capabilities in both preclinical and clinical areas. Others are “niche” providers that are more narrowly-focused, providing expertise in a novel platform or technology, or specific therapeutic area.
Of course, there are many other factors driving the direction of drug discovery, ranging from the location and experience of a CRO, to how it stores and secures its data, to what kind of reputation it has with regulators. How extensively has a CRO tested and validated its models? Will it be transparent about how it manages data and will it provide a client with insights into how it secures, reports and archives data? For that matter, how healthy is the CRO financially?
During early discovery, companies may be particularly concerned about confidentiality of data and intellectual property. These concerns often determine which aspects of discovery a company decides to outsource and which ones to keep in-house. From the CRO’s perspective, there are also factors to consider. It will want to make sure its scientists are attending the annual conferences, publishing studies in peer-reviewed journals and interacting with experts that relate to the disease fields that they target. It will need to demonstrate expertise and experience in key platforms and therapeutic areas of interest and they must go beyond offering traditional endpoints and animal models to offer an integrated program in a project environment.
Given the considerable investments that will be required if a company decides to move a drug forward, it is also important for a CRO to have a proven track record in the field of discovery and specific therapeutic areas.
The CRO will also need to examine how comfortable it is operating in the discovery arena. A CRO that has been active on the more regulated GLP-side many not necessarily have the best skill sets to operate in the Wild West arena of basic discovery. For instance, a CRO with broad-based experience in the more rigid, document-driven region of GLP regulatory compliance may not necessarily have the kinds of systems that enable it to be nimble enough to make changes to a study design that could alter the next phase of research. In the GLP space, there are multiple levels of approval that need to be signed off on and documented; in the non-GLP space changes to study designs can occur rapidly.
In fact, the more fluid dynamics that rule in discovery are one of the key reasons why pharma companies have resisted outsourcing discovery. This sentiment only started changing when CROs proved they could do it. Moving forward, some CROs may find they need to establish different divisions, assign separate staffs or establish different processes to manage their GLP research and non-GLP discovery work.
At the end of the day, building trust will be the ultimate key to success. If a client doesn’t have confidence in the CRO, or is skeptical about how it conducted the study, the relationship won’t last very long.
But under the right conditions, these strategic partnerships just might spark the development of new life-saving therapies that otherwise might have languished.
- Pharmaceutical Research and Manufacturers of America: 2013 Pharmaceutical Research Industry Profile. http://www.phrma.org/sites/default/files/pdf/PhRMA%20Profile%202013.pdf. Published April 2013, Page 32.
- Pharmaceutical Research and Manufacturers of America: 2013 Pharmaceutical Research Industry Profile. http://www.phrma.org/sites/default/files/pdf/PhRMA%20Profile%202013.pdf. Published April 2013 Page. 31.
- Getz KA, Lamberti MJ, Mathias AB, Stergiopoulos S. Resizing the Global Contract R&D Services Market. Contract Pharma. June 2012.
- Stergiopoulos S, Kim J, Getz KA. Characterizing the Cost of Non-Clinical Development Activity. Contract Pharma. June 2013.
- Anscomb A. Outsourcing in Drug Discovery, Kalorama Information, a Division of MarketResearch.com. May 2012.
- Lane RF, Friedman LG, Keith C, Braithwaite SP, Frearson JA, Lowe DA, Longo FM, Refolo LM, Watterson DM, Tsaioun K, Shineman DW, Fillit HM Optimizing the use of CROs by academic and small companies, Nature Reviews, 12 487-488 July 2013.
Nancy A. Gillett, DVM, Ph.D., is the chief scientific officer at Charles River Laboratories, which provides products and services to help pharma and biotech companies, government agencies and academic institutions around the globe accelerate their R&D efforts. She can be reached at firstname.lastname@example.org.