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Trials, Tribulations And Triumphs

Strengths, challenges and outlook for the CRO industry

By: Sarah W.
CROs are becoming less and less dependent on big pharma, with as much as 25% of their business coming from biotechs and start-up pharma. Since smaller companies don’t have the capabilities larger pharmas have, outsourcing that work is a logical option for them. Market pressures are also causing pharmaceutical companies to put a greater push on its products through development phases. In just over 10 years, the industry has grown from $1 billion to more than $6 billion today, and it continues to grow. According to the Association of Clinical Research Organizations, CROs employ nearly 100,000 professionals worldwide.

But the CROs aren’t resting on their laurels; they’re pursuing non-traditional opportunities. There has been a trend among some major players toward getting in on the action at the preclinical stage to add value to sponsors and encourage them to stick with the CRO through the further stages of development. For biotechs, an industry that often lacks the capabilities of developing its products after discovering them, outsourcing these stages puts the puzzle together. Of course, big pharma still contributes a very significant part of the business that is outsourced. Everyone is on a quest to reduce development times and costs, and the CRO industry has helped pursue that goal. Improved methods of patient and CRA recruitment, as well as industry standards with regard to technology and regulatory submissions will only continue to speed up the process.

As approval times for biopharmaceuticals have dropped 21% since the 1980s, the required pre-market studies for biopharmaceuticals are taking longer to complete, according to a study done by the Tufts Center for the Study of Drug Development (TCSDD). The prolonged development times are mostly due to the fact that these biopharmaceutical programs have become more complicated and challenging. According to the TCSDD’s Outlook 2003, “Approval success rates for biopharmaceuticals will likely increase, and clinical development times decrease, as genomics and proteomics provide more targets and as screening technologies provide better guidance on which leads to pursue. But like their bigger pharmaceutical counterparts, biotech companies will have to reduce development times, which have lengthened steadily in the past two decades.” As more biotech products come through the drug development pipeline, CROs must continue to perfect their capabilities and decrease development times, resulting in lower costs to their customers.


Getting In Early
Some CROs are getting in on the action at a very early stage. Covance, PPD and MDS Pharma services have all strengthened their preclinical capabilities in the last few years.

According to Doug Squires, Ph.D., chief executive officer of MDS Pharma Services, approximately 70% of the company’s business is Phase IIa and earlier, including the discovery, preclinical, early clinical and bioanalytical services that the company offers. Dr. Squires said, “I personally believe that there are great advantages in having strength in the early phases because you can actually do that type of modular and customized flexible work that I think brings high value. I would rather have those components to work with than just being a Phase III CRO. That doesn’t mean you can’t be successful as a Phase III CRO, but I feel that these capabilities present the opportunity to be highly oriented to the client and able to customize programs in a variety of ways.”

In the past year, MDS Pharma Services has integrated its venture with Iconix Pharmaceuticals, a California-based genomics company. Together, the companies built a unique chemo-genomics database called Drug Matrix that generated new data on approximately 1,000 compounds. Iconix did the gene expression work and provided the IT platform, while MDS performed the biology and pharmacology work. The database was launched in 2002. Dr. Squires said, “We’re very interested in that area because one of the largest issues facing pharma is the issue of attrition rate. You’ve got thousands of new targets that are poorly validated and you have a real issue of which compound to choose.”

He added, “There are those that believe that the research efficiency is going to be degraded because you are by definition going to be bringing more uncertain compounds through the preclinical and clinical development phase, so the failure rate is going to be higher and the costs are going to go up.” One of the approaches to attempting to address that is trying to put together prospective data and searchable data so that a company can actually predict, based on structure or a new compound’s biological profile or gene expression profile, what might happen to that compound as it moves forward in clinical development. “It engages us in the fundamental and early processes of late discovery or very early development,” said Dr. Squires.

Information from TCSDD’s Outlook 2003 showed that, as information from proteomics and genomics provide more targets and screening technologies enable better decision-making, biotech companies will then be able to make better, more informed decisions about which products to take into the clinical development process. PPD Discovery also assists sponsors in the identification and prioritization of portfolio compounds that have the best chance of success in clinical development. According to the company, its goal is to help sponsors gain return on R&D investment by ensuring that non-viable compounds fail as early as possible in the process while the best leads are advanced.

Some CROs believe that getting in on the action early will lead to further business down the line. For example, if a biotech company contracts a CRO that has preclinical capabilities, it may be easier for the sponsor company to stick with them, instead of going through a transfer to another provider for the later stages of development. Whether the decision to expand theses capabilities was to add value to the customer, or the pressure to diversify the CRO business mix in search of revenue, is up for debate. William Haus, a research analyst who covers the CRO industry for Advest, Inc., commented, “Take PPD, Inc., where a large portion (70%) of revenue is coming from Phase II-III. They have also added MRL International, which is a lab-based, preclinical business that diversifies their revenue. They’re further penetrating their client base by offering a broader array of services, and that helps them.”

However, getting in early isn’t the business model, and it doesn’t mean companies without those capabilities will be unsuccessful. As Josef von Rickenbach, chief executive officer of Parexel, put it, innovation is cyclical. He said, “It’s an innovation wave, or cycle. I think it’s an important trend and we are all subject to it, including large pharma companies. As the peak of the wave moves through the areas in which you provide services, you will do much better than once it has passed. In the last two or three years, there was much activity in the preclinical area, so the preclinical companies have done very well.”

As the wave of innovation from biotech that filled the preclinical portion of development moves forward, those CROs that provide Phase II/III services will start to benefit. Depending on where the crest of the wave is, that is where those companies will be successful.


The Search for Patients Takes Patience
A critical issue facing the CRO industry is the search for patients. There are numerous articles, educational sessions and seminars that address this issue as the industry looks for the answer. According to the TCSDD’s Outlook 2003, “Firms will expand their use of e-technologies to reduce the length and cost of clinical development by improving the investigator site selection process, reducing delays in recruiting patients for clinical trials, lower trial monitoring costs, and permitting quicker, cheaper collection of clinical trial data.” Each company has its own ideas as to what works for them, but as insiders have said, it can always be better. One way Quintiles Trans-national has gone about this issue has been to develop a solution based on informatics. Thanks to its relationships with hospitals and pharmacies, Quintiles has been able to mine “de-identified” prescription and claims data to facilitate the process of pinpointing a site and patients.

For example, if there were a high concentration of Alzheimer’s patients in Moscow, ID, it would probably make sense to have a site there. According to Paula Brown-Stafford, executive vice president, scientific operations, Quintiles clinical development services, it is about looking at prescription and claims data and mining that data to detect or to determine where these sites should be located. Ms. Brown-Stafford said, “We had a client where, for about six months they were unable to find any patients on their own. We used these data to show them that there weren’t any patients out there that met their criteria. They had to go back to the drawing board, after wasting six months recruiting sites and spending time on development for a patient population protocol they’d written that wasn’t there.” Being able to provide that information to sponsors saves money and, even more valuable, it saves time.

For now, there is no panacea for patient and CRA recruitment, although it might be advisable for the industry to pray for one. CenterWatch has predicted that there will be a CRA shortage by 2005. Kendle International’s approach is based on an investigator database that shows if an investigator has been proficient in the past, as far as recruiting certain kinds of patients with certain kinds of illnesses. As the company has grown over the years, so has the database. The company also uses a “study startup team” approach, which, according to Thomas Stilgenbauer, executive vice president and chief marketing officer for Kendle, is “almost like its own department.” Mr. Stilgenbauer remarked, “Recruit-ment is always an issue and you’re always looking for a certain therapeutic expertise in order to serve certain pipelines for certain customers. It’s not just that you need a project manager; you need a project manager in oncology or a project manger in CNS, for example. It’s a challenge, but I think we do pretty well.” Whether it is a proprietary system or one bought from a vendor, using new technologies and techniques to improve patient recruitment is well worth the money spent. You’re only as good as your last project, right?


A Call to Standards
Not only is new technology enhancing patient recruitment, new strides in data capture and electronic submissions have cut down the length of drug approval times. According to the TCSDD’s Outlook 2003, “Firms will benefit from implementation of the International Conference on Harmonization’s (ICH’s) Common Technical Document (CTD) guideline which provides a common framework for submission of licensing applications. As of July 1, 2003 the CTD will be required for regulatory submissions to the European Medicines Evaluation Agency (EMEA), Japan’s Ministry of Health, Labor and Welfare and Canada’s Therapeutic Product Programme, and will be ‘highly recommended’ for submissions to the U.S. FDA.” The standardized CTD will help firms cut down on the time spent on regulatory submissions and make the process easier for an overworked FDA.

In order to address the need for standards, an organization aimed at facilitating the move to a CTD, as well as other standards, formed called CDISC, the Clinical Data Interchange Standards Consortium. The consortium is made up of big pharma, biopharma, technology vendors and CROs. According to its web site, www.cdisc.org, “CDISC is an open, multidisciplinary, non-profit organization committed to the development of industry standards to support the electronic acquisition, exchange, submission and archiving of clinical trials data and metadata for medical and biopharmaceutical product development.” Quicker review times and improved management of clinical trial data as a result of industry standards will only stand to benefit all parties involved, whether it be the EMEA, FDA, Pfizer or Quintiles.

Ms. Brown-Stafford of Quintiles commented, “Standardiza-tion is certainly going to help in terms of the review process at the FDA, which is another part of the timeline, which to some degree has been out of the pharmaceutical companies’ hands, as well as ours. A common technical document is a standardization across all NDAs and therefore helps with the approval process from the FDA.” The move toward standardization comes about at an important time for the FDA. Outlook 2003 states, “Firms in the U.S. will be competing for FDA attention as the agency, under its new commissioner, balances scarce resources to respond to demands for faster drug application reviews, greater oversight of post-approval safety data, and increased attention to the ethical conduct of clinical trials. The FDA will also have to manage the proposed transfer of oversight for biotechnology products from CBER (Center for Biologics Evaluation and Review) to CDER (Center for Drugs Evaluation and Review), and address the threat of bioterrorism.” The FDA has its work cut out for it, but “highly recommending” the CTD is a step in the right direction.


The Growth of Phase IV
Recently, more attention is being focused on Phase IV, post- or peri-approval studies. Added pressures on the pharmaceutical industry to put out blockbuster drugs have caused pharma companies to develop therapies for already crowded markets (like cholesterol lowering drugs, for example). While it is possible for a drug to seize market share, the drug company will have to prove that its “me too” drug is more effective than the rest, and thus worth the price. David Ginsburg, chief medical officer at Omnicare Clinical Research, commented, “I think there is an emphasis on getting the most mileage out of current products. This is mostly in response to a reduction in the flow of new products. Consequently, late stage programs are growing at twice the rate of early stage programs.” A post approval-study can help “prove” that one therapy is more effective than a competing drug.

Courtesy of the Tufts Center for the Study of Drug Development

Some CROs are now refocusing their business and putting an emphasis on Phase IV. Mr. Stilgenbauer of Kendle, commented, “I think you’ll see that the cost pressures on pharma will continue, which is only good news for CROs. At Kendle, there is a huge push to expand our Phase IV business. We have some nice experience there, but we haven’t gone after it with the vigor we have for our II-III capabilities.”

Not only is there a focus on comparing competing products in the post-approval phase, but the work done in Phase IV also provides valuable data for the OTC switch. If a company plans to eventually switch its product from prescription to OTC, as Schering-Plough did with Claritin for example, the Phase IV data will be very pertinent for that. Dave Morra, chief executive officer, Omnicare Clinical Research, said, “The challenging environment in the pharmaceutical industry is prompting drug companies to emphasize an expanded use of marketed products through new indications, with more aggressive spending on commercial products. The pharmaceutical market continues to become more competitive and, as sponsors look for a competitive edge, Omnicare Clinical Research’s expertise in PeriApproval and geriatrics will become a valuable asset.” Pharma companies don’t want to waste the time or the resources on performing those services themselves, and contracting a company with those capabilities is cheaper and allows pharma to concentrate on their core capabilities; discovering, marketing and selling drugs.

Courtesy of the Tufts Center for the Study of Drug Development

The growth of Phase IV, the need to shorten development times, and the drive for lower costs all add up to more business for the CRO industry. With improving patient recruitment practices, CRA retention and the creation of industry standards, the CRO industry, as many insiders would agree, is looking bullish. Let’s hope the FDA will be able to keep up with it all.

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