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    Preclinical Outsourcing

    News from the SOT Grapevine

    Hot topics from a recent tradeshow

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    Steve Snyder04.30.08
    I have been attending the annual Society of Toxicology (SOT) meeting for many years. This meeting and the annual American College of Toxicology (ACT) meeting are the primary venues where toxicologists gather to discuss science, business, and experiences since their last gathering. The SOT is a large meeting with thousands of attendees and it is always fascinating how certain themes seem to arise at each meeting when the meeting participants share stories of their work experiences. This year, the SOT was held in Seattle during the month of March.

    Before we proceed, I need to state a couple disclaimers. First, the SOT is a wonderful meeting that is comprised of scientists from industry, academia, and government; since I work in the drug development industry and this is an industry-oriented publication, I will only share my observations as they relate to drug development industry. I wanted to at least acknowledge the diversity that comprises the SOT membership.

    Secondly, what I share below are observations that I noted after talking to a lot of people during the meeting. Some observations are a compilation of opinions where other observations are a compilation of facts. It is important to realize that there is a difference between the two and that the best outsourcing decisions are made when a sponsor follows up on industry hearsay with its own due diligence.

    Now that we are aligned on the content of this article, here is some of the news from the recent Society of Toxicology meeting:

    Quality



    I should have figured that quality (or the lack thereof) would be a hot topic during the meeting when I learned of quality issues at a CRO from another consultant during our cab ride from the airport to the convention hotel. During the course of the meeting, sponsors willingly shared experiences with me where they had encountered quality issues on their studies at CROs. Several sponsors indicated that they would never place work at one CRO or another ever again. When we discussed the causes of quality issues, sponsors identified inexperienced CRO staff and/or ineffective training as a primary factor. In many instances, it seemed like these quality issues often occurred at larger CROs that had ongoing capacity expansion projects, but this is pure speculation on my part. One CRO that seemed to get a lot of negative chit-chat regarding quality was also reported to be aggressively undercutting the pricing of its competitors. True or not, these observations should remind us that low prices don't always relate to acceptable quality. Ironically, some sponsors willingly pay higher prices, thinking that this will buy them higher quality work. But this is a myth; sponsors can best situate their outsourcing experiences for success by, conducting appropriate due diligence, maintaining a good relationship with CRO partners, and by staying involved in study activities through open communication and active study monitoring.

    China



    A lot of sponsor companies still have a lot of interest in doing toxicology work in China. The potential savings of doing preclinical drug development there provides the ongoing motivation to evaluate Chinese-based CROs. While the lower costs are inviting, concerns linger about quality, protection of intellectual property, and effective communication. Still, the momentum for identifying CRO partners in China seems to be building. One executive from a large pharma company told me, regarding China, "It's not if we will do work there, but when." Clearly, this market is playing a role in at least one company's drug development strategy. Conversely, another pharma scientist told me, "I'm having a hard enough time outsourcing to CROs in the U.S. Why would I want to place work in China?" The development of the CRO market in China is still a work in progress. Sponsor companies remain very interested in this opportunity but the logistics that are critical for a successful outsourcing experience, like those that are mentioned in the previous section, still need to be addressed.

    The Economy



    For toxicologists, the SOT meeting is also a time to catch up with former colleagues. This year was a bit different. I learned that several friends and colleagues had been "offered packages." This term comes from the same industry that introduced "downsizing" and "rightsizing." Whether you call it "early retirement" or "layoffs," some of the regular SOT attendees were notable by their absence. Headcount reductions at Pfizer, Bristol-Myers Squibb, Amgen, and Johnson & Johnson were among the discussion topics at the meeting this year. Ironically, some of the same companies that recently reduced their headcount were actively recruiting new employees at company booths in the exhibition hall. Having previously worked in the Pharma industry, I am sure that there is a reasonable explanation for this seemingly inconsistent strategy that just isn't apparent to me. Right?

    The other interesting note about the economy is that U.S.-based CROs are reporting an increase in business from European-based Pharma companies. This change is being attributed to a favorable currency exchange rate. In a way, the U.S. CRO market today presents a similar savings opportunity for European pharma companies as the emerging Chinese CRO market does for the U.S. pharma industry.

    Canadian CROs



    It has become quite interesting to watch the business dynamics in the Canadian CRO market. Charles River-Montreal, LAB Research, and ITR Laboratories are all located in the Montreal vicinity, while Harlan/RCC is bringing another preclinical CRO facility on-line near Toronto. Since an experienced CRO staff can be a significant factor in attracting and retaining sponsors, key scientists and management personnel are being recruited by these competitors to fill roles in their own companies. What is most interesting is that you will hear about the departure of a key individual from one Canadian CRO only to later learn that they have joined another Canadian CRO in the same area. Over the past two years, the Canadian companies mentioned above have seen experienced some turnover in key talent. It is a bit odd to see someone whom you always identified with one company now occupying a key role at its competitor. For these CROs, attracting and retaining key talent has become a significant challenge since workers can now boost their salaries by just moving to a CRO across town. For sponsors, you may be surprised to learn that the individual at your Canadian CRO partner who handled your business may now be working elsewhere. Sponsors now have to build relationships with those who have backfilled for departed employees and hope that communications don't suffer during the transition.

    Sponsor Headaches



    The SOT meeting presents an excellent opportunity for sponsors to exchange stories about their experiences with CROs. These exchanges are often a means for sponsors to validate their selection of an outsourcing partner and/or determine if additional due diligence is required for potential CRO partners. In fairness to the CROs and those that work in these companies, the information shared among sponsors is almost always about negative experiences. There are many preclinical CRO operations in the North American market that enjoy excellent reputations for performance. Unfortunately, sponsors assess performance on an ongoing basis and they seemed more inclined to share bad experiences. Some of the operational concerns that I describe below are so extraordinary that they have become industry folklore, as these stories are often repeated over and over. If you are a sponsor and this is the first time that you are learning of the significant incidents below, you really should expand your networking within the industry and ramp up your due diligence. Here are some actual CRO performance issues as told to me by sponsors and other consultants:

    • A CRO accidentally discarded the test article (i.e., the potential new drug) that was to be tested on the sponsor's study.
    • A technician removed a study animal from the CRO facility.
    • A sponsor's study was accidentally dosed with another sponsor's test article.
    • During a monitoring visit, the CRO host could not find the study room where the sponsor's study was housed.
    • Sponsors were unaware that the CRO that was conducting their preclinical studies was the target of ongoing animal rights demonstrations.
    • The training documentation for some CRO employees was not current.

    In this article, we reviewed some of the news items that were discussed among attendees at the annual Society of Toxicology meeting. Every preclinical CRO encounters operational issues from time to time. Those CROs that keep the occurrence of operational issues to a minimum and effectively address operational issues when they do occur are the CROs that generally enjoy the best reputation for performance. The news items above should only supplement a sponsor's CRO selection and due diligence activities. Sponsors should never make critical outsourcing decisions based solely on hearsay information. Each sponsor has an obligation to seek factual information regarding a CRO's performance and capabilities. Sponsors that enjoy successful outsourcing experiences understand the value of networking with industry colleagues and they realize that preclinical outsourcing requires their active participation.

    Steve Snyder is a consultant with more than 25 years of experience in preclinical toxicology as an outsourcing customer and provider.
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