Outsourcing of Clinical

Research: An overview
Background

 Until sumtime back

 pharmaceutical cos traditionally sponsored & ran
CTs in-house
 Today, outsourcing CR activities has become
the norm
 Sponsors turn to CROs for the efficiencies
offered by their resource capabilities and
expertise
Background

Changed CR Scenario
 Regulatory harmonization thro’ ICH

guidelines – possible to conduct CTs on a

global scale
 Most dramatic change in modern drug devpt.-

contracting of drug-devpt responsibilities

CROs – OUTSOURCING
 Approx 52% of clinical studies are contracted
(partially or completely)
New Drug Development is...

Expensive 500 Million US $ 2500 Crores Rs

Time consuming 12 years

Cumbersome 1 out of 10,000 NCE

becomes a marketable drug

… and what will the Marketing outcome be?

Outsourcing in Pharma
Industry

 Outsourcing in pharmaceuticals is broadly

divided into
 manufacturing outsourcing

 development outsourcing

 customised chemistry services

at all stages of the product life cycle

Outsourcing in Pharma
Industry
 Manufacturing outsourcing -supply of
active pharmaceutical ingredients /
intermediaries

 Development outsourcing - pre clinical and clinical

trials

 Customised chemistry services - contract

research for molecules in the pre launch
stage
Outsourcing: History

 Outsourcing is not a new concept to

pharmaceutical companies
 Tendency started off in 1940s
 Started in IT industry --- moved to Pharma
Industry
 Similarity – Advantage India
 Use increased dramatically in the mid-1990s,
and it is expected to continue to increase
going forward
CRO
 Clinical research (CR) organization is one
that manages a research or an investigation
to assess and/or verify the clinical,
pharmacological or other pharmacodynamic
effects, safety and/or efficacy and adverse
reactions of an investigational product

Comprehensive
Only CT management of
management complex drug trial
processes
facilitate access to
vast areas of expertise
Outsourcing: Current trends
Worldwide Spending on CRO
Service
Percent Outsourced — Clinical Trials Biotech Companies
Outsourcing: Current trends
What percentage of work did your company outsource in Clinical Development
in 2003, and what percentage do you expect to outsource in 2006 and 2008?
Percent of
Responses

24% 24%
31%
5% Percent
5% 12%
Outsourced
10%
31% = 80–100%
29%
= 60–79%

6% 15% = 40–59%
57%
8% = 20–39%
29%
15% = 0–19%

2003 2006 2008

© Cambridge Healthtech Advisors, Pharmaceutical R&D Outsourcing Survey, July 2004

What all can you outsource?

 Everything in clinical research

 Protocol writing/ medical writing
 Site Management
 Monitoring of studies
 Data management
 Audits
 Report writing
 Dossier compilation
 End to End
Why Outsource?
Problems faced by the pharma industry
 Resource constraints
 Cost of drug devpt have increased steadily
 US$800 million per drug
 Several failures – risk intensive
 Major R & D costs come from clinical trials
 R&D expenditure growing at > 15% / year
 CT are becoming more complex
 Proportion of industry R&D expenditure allocated to clinical
development has increased steadily [32.5%(‘96) to 39.5%
(’98)]
 Delays & setbacks that can cost millions of $
 US$1m a day
Why Outsource?
 Outsourcing reduces costs because outside
contractors focus on
 specific services they provide and
 maintain a more cost-efficient business model as a result
 No. of new products in development pipeline
steadily increasing
 Applying external skills and expertise directly when
and where they are required avoids a dependence
on fixed resources- flexibility –reduced need to
recruit or relocate- reduced overhead costs
How it works?

 Critical Success Factors in R & D

 right systems in place to take advantage of
scientific breakthroughs, but also right
environment for innovative processes
downstream to flourish
 Difficult: costly and risky- balance with commercial
benefits
 when to rely on in-house capabilities and when to
take advantage of skills that exist externally
How to Outsource?
 CROs may be used for many different services -
monitoring, writing, auditing, data management,
biostatistics, etc.
 proportion of research assigned to CROs has increased
dramatically in the last decade.
 As SPONSOR- policy must be to select CROs that
work in conformance with the current international
standards of GCP - careful evaluation of a candidate
CRO must be performed prior to placing an
assignment
 Further management of CRO
While outsourcing- Look for
In selecting CROs, the sponsor should review the following items:
 SOPs: quality of SOPs, compliance with SOPs, other QA
systems (e.g. internal auditing, proficiency testing), and
determine exactly which SOPs (i.e. sponsor or CRO) will be used
 Range of services: reputation, experience in therapeutic area to
be studied, previous experience with sponsor
 Personnel (details of qualifications, training, experience,
workloads and specific assignment for the study)
 Suitable facilities: equipment and technical ability fors pecific
tests to be undertaken in the study, location (proximity and ease
of access to study subjects and investigators), security,
archiving, facilities for prompt communication with the sponsor
and the study sites
Look for…..
 Confidentiality provisions
 Protocol and CRF development
 Ethics committee(s) review and approval
 Regulatory requirements
 Monitoring standards/ frequency
 AE reporting procedures
 Study medication/device management: packaging, labelling,
storage, accountability and reconciliation, destruction or final
disposition
 Clinical laboratory requirements
 Data management and statistical analysis, capability for data
transfer, if needed, documentation of validation of computer
systems
 Clinical report production
How to Outsource?
Contracts with CROs
Contracts between CROs & sponsors should specify following:
 Allocation of responsibilities
 Monitoring strategy
 Project timing
 Reference to specific guidelines and regulations
 Description of legislative jurisdiction
 Provisions for amendments to the contract
 Time period during which the contract is valid
 Requirements for documentation (e.g. format, frequency) of all
activities
 Specific contact names
 Confidentiality
 Financial arrangements (including timing and condition under which
payments will or will not be made)
Whom to Outsource to?

 The right team - experienced, committed and

flexible, with dedicated snr leadership to
ensure project continuity and communication
 The right skills - excellent project
management skills, with appropriate R&D
expertise and therapeutic area knowledge
 Documented work processes- Effective
project and knowledge mngt systems can be
cost-, time- and risk-efficient
Whom to Outsource to?
 Best-fit suppliers- to use validated, experienced
suppliers that are specifically selected for their
complementary skills, and access should be provided
to the appropriate resources and expertise as required

 Good contracts- Effective contract management will

clarify responsibilities and timelines between client,
outsourcing company and suppliers

 The right locations- Both local focus and global

reach are required to work effectively across markets
What & Whom to Outsource?
 Sponsor - to minimize challenges involved in managing outsourced
CTs- must learn to
 establish relationships with right partners
 manage the project & process tightly
 Key to managing relationship -knowing which partner to select

3 options
5. Choose to work with 1 provider for all outsource components
 Advantages- transparency across functions, clear accountability, and
fewer oversight complications
 Downside to such a strategy
 one CRO- unlikely to have in-depth expertise across all functions
 large vendors who offer wide array of services - more focused on their top
pharma clients - not be an appropriate partner for smaller biotechs and
pharmas
What & Whom to Outsource?

1. Select several outsource partners

 Advantages- Deep expertise and greater flexibility
 will have to manage many different interactions
and cope with a lack of accountability and finger-
pointing between the vendors

3. To outsource some functions with a provider, while

keeping other activities in-house.
 Deciding which aspects to outsource will depend on core
competencies of both vendor & sponsor
What & Whom to Outsource?
 Outsourcing components where a Co,. lacks
business expertise makes sense
 Sponsor may be giving up critical efficiencies
 an element that might offer a competitive advantage.
 e.g. sponsor - systems & processes - support immediate
payment of investigators upon completion of CT milestones
 If this enhances investigator relationships and, consequently,
study conduct, it would be unwise to outsource such a
function
 Slow reimbursement or a failure to meet milestone payments
-hinder CT, preventing follow-on studies from getting under
way or forcing cutbacks to high-recruiting studies.
 Creates further delays to drug development
Good Communication is the
key
Good communication is critical for success
 Early discussions -center on what's important to
both parties & review of SOPs and product
deliverables, future expectations
 Getting to a point where expectations are clear -
many discussions with multiple parties.
 Project moves - key personnel may change
 Early stage- key people will be the managers
involved in formulating contract
 Further down the line- personnel in clinical
supplies, in monitoring, and in trial management
Good Communication is the
key
 Decisions made by each group - communicated
and shared internally & with external partners
 Patient recruitment, market conditions, or results
affect deliverables- communication within &
between organizations will be critical
 Build a communication plan that will facilitate
management of these transitions
 AUDIT
Please, do not
disturb

An independent examination to
verify:
 the compliance with GCP principles
 the effectiveness of quality systems
Audit
CROs and other organizations involved in CT outsourcing
 Required to undergo an independent regulatory compliance
audit to ensure - procedures, systems, documentation, &
controls comply with regulatory guidelines and standards
 Will provide sponsor with important info about vendor
 Enables sponsor- fulfill its due-diligence obligation to
regulatory bodies - proving - conducting CTs in compliance
with regulations
 Relationship building- enables sponsor to identify specific
commonalities & differences with vendor
 Expose vendor SOPs, enabling comparisons with sponsor
SOPs
 sponsors can drill down with questions & specific examples
to better understand SOPs' usage,
 uncover those practices that mesh with pharma's own
practices and those that can be tolerated or adapted
System Integration
 Want Lower Costs? Integrate!
 work toward system integration – interest of both
parties
 Develop a small-scale integration plan- focusing
on processes used for data entry
 Entry of data from multiple sources is done
manually- huge propensity for error
 Central system for data entry -dramatically reduce
error reporting Sponsor
CRO
System Integration
 Longer-term integration goal –
 put in place a data-warehousing tool or

 clinical trial management system (CTMS)

 to collate data from a variety of systems- central lab systems or

clinical database management systems, and then linking those

systems to the operational data necessary for managing a CT
 By integrating info necessary to manage CTs in a central
repository, or CTMS
 teams from sponsor + project teams (vendor) are brought into
loop on all aspects of the trial
 To cut time and costs involved in developing a CTMS,
companies should adopt commercially available systems
By outsourcing, what can you
expect?
 Reduction in time to market
 Extended patent life
 Efficiency
 Clinical trials are a CRO’s core competency
 2004 leading CROs
 managed 23,000 P I-IV trials worldwide
 monitored > 150,000 CI
 enrolled > 640,000 new subjects
Outsourcing: Models

Em
erg
ing 'Risk-Reward' Model
mo
de
l
India as a Outsourcing
Destination
 Clinical trials outsourcing is now a major business in India
 McKinsey - $1.5 and $2bn by 2010

 Over 100 companies are currently involved in outsourcing in the

country
 Humanity as a whole stands to benefit from the faster, cheaper
CTs offered by India.
 greater range of cheaper drugs to tackle several widespread

diseases
 Majority of CTs in India focus on infectious disease and oncology

 Trials in neurology to endocrinology

 More drugs reach market- competition between rival therapies -

bring down costs & present interesting new combinations to

physicians
 E.g. cancer drugs
India as a Outsourcing
Destination
 India has become a favourite location for CTs for
several reasons
 Becoming more & more difficult to conduct trials in
West
 people become more risk averse and
 less willing to trust experimental treatments
 strict regulations
 elaborate safety and compensation requirements, and
 small populations
 Becoming more tricky to gather together enough
suitable subjects to make a meaningful trial—this is
one of the most common reasons behind trial delays
in the US
India as a Outsourcing
Destination
 India is more of a federation of distinct ethnic
groups than a homogenous nation, it is full of
genetically distinct groups—an extremely
attractive factor for trial managers.
 Access to medicines has for many yrs been
low- majority of India's huge patient
population is "treatment naïve"
What do we get?

 Brings foreign exchange -lift to tax receipts

and the economy
 Reverse brain drain
Outsourcing to Asia/India

Outsourcing R&D
 Concern still exists over communication and

timeliness problems but the situation is getting

better
 Some Asian CROs can claim business efficiency

equivalent to U.S.-based CRO

 Communication typically done through email with

10-12 hour time difference taken into account

 Many CROs now have in-house videoconferencing

facilities
Outsourcing- Downsides

Downsides to Outsourcing R&D

 Lack of Intellectual Property Rights

 This situation is improving, but not great

 Logistics of moving raw materials and

finished compounds between laboratories,

overseas collaborators, and drug companies
can be burdensome
2.4 – Key Outsourcing Advantages Summary

Outsourcing: the Good Side

• Allows for portfolio management of leads and compounds in the clinic

• Improves cost productivity

• Focus on core competency—where company adds most value for

shareholders

• Lower capital expenditures

• Improved time to market

• Flexibility of growth or contraction given revenue projections

• Need for access to technological innovation

• Improved service levels and product quality

• Prequalification of satisfactory service levels and protocol adherence

3.1 – Relative Current Position: Outsourcing Opportunity
Outsourcing Opportunities Exist

• High R&D expense as percent of sales implies opportunity to utilize

outsourcing to improve R&D productivity and increase sales.

• Outsourcing can help mitigate the significant and uncontrollable

factors of drug development by increasing the variety of technologies,
timeliness and cost of NCE introduction.

• If managed effectively, outsourcing can improve R&D productivity

and impact sales. The key elements of successful outsourcing are:
 Specific, measurable goals exist
 Communication channels are open and effective
 Measurements must be aligned with sponsors’ goals
“Clinical outsourcing offers a development
speed advantage at comparable quality,”

 What it comes down to is, if a company is

involved in drug development, it needs a
CRO
Conclusions
 Outsourced $$ growing
 Biotech pipeline continues to grow
 Large Pharma will outsource full-services and
functional
 Biotech will primarily outsource full-services
only
 All sponsors continue to look for alternative
strategies
 Capacity and consistency are key