It is all too tempting for field reps to put on blinders before they confront the changes that have occurred in our industry. Why would reps bother with the patterns of industry consolidation or fragmentation that industry observers have been watching recently – especially when media criticize pharmaceutical sales and marketing practices, or spin healthcare affordability.
If you have kept watch of the outsourcing trends, broad patent expiries and what critics perceive as lagging innovation, you probably expected the industry to move as it is moving. It’s likely you also expected some of the moves that have planted anxiety in the minds of field professionals, including the recent Pfizer cost-cutting and other recent systematic restructurings of pharmaceutical companies.
Today’s pharmaceutical companies face two main problems: lagging innovation and costly drug development. According to my colleague Dr. Faiz Kermani, one response to the costly pressures of development has been outsourcing. Dr. Kermani is a U.K.-based expert on the outsourced clinical research industry. He has written extensively on trends of clinical outsourcing and R&D strategies both within the U.S. and internationally. I asked Dr. Kermani about these two significant problems the pharmaceutical industry is facing.
Jane Chin: Why do pharmaceutical companies outsource their services, for example, to a contract research organization (CRO)?
Faiz Kermani: Pharmaceutical and biotech companies outsource to contract research organizations to meet productivity goals. Outsourcing enables companies to reduce overall costs, cover gaps in capacity and improve their skill base so companies can concentrate on parts of the R&D process that they can adequately resource. The CRO can use its existing global R&D infrastructure to cover the needs of the sponsor company. A similar logic exists in a situation where pharmaceutical companies look to a contract sales organization (CSO) for an outsourced sales force.
You emphasized the importance of relationships to outsourcing. What do you mean by this?
Drug development is often described in terms of cost, quality and timelines. However, relationships are key to success when pharmaceutical companies outsource research and development, just as relationships are critical to a sales force outsourcing situation. Initial resistance to using CROs may be comparable to resistance using contract sales forces: companies may feel they would lose control. In the case of outsourced research, this would be control over the development of their products. Many companies would treat the CRO more like a hired hand than a true partner. This attitude prepares the business relationship for failure.
What would prepare an outsourcing relationship for success?
Viewing outsourcing more objectively and understanding the need to create a true partnership with the CRO. Then companies may have their outsourcing managers oversee the work of the CRO, rather than involving large teams in every procedural step and draining resources. A capable CRO can improve its own processes to suit the client company’s objectives and develop the role of the project manager, who would oversee work from the client-company end.
What drive’s companies to establish global presences?
Companies aim to operate in as many national and regional markets as possible to drive growth. This globalization goal requires a globalization of clinical research as well. After all, data from clinical trials define a product’s chance for success far beyond the initial product launch. Relying on home markets alone will not be enough to generate the scope of clinical data necessary for global commercial objectives.
Additionally, companies believe international trials can help them gain rapid access to more patients and allow clinical trial cost containment. For example, in emerging clinical trial markets, study costs are often lower than those seen in Europe, the U.S. and Japan because emerging clinical trial markets can recruit patients faster and provide lower operating costs.
Globalizing clinical research is a complicated yet critical development goal. What about regulatory considerations?
As the pharmaceutical industry endures greater scrutiny over its commercial activities, companies must demonstrate that they are operating ethically when carrying out clinical trials in emerging markets. Companies must adhere to the high standards required for clinical trials, including rules set forth by the International Conference on Harmonization’s standards.
Tracking trends that impact pharmaceutical companies today is within the purview of industry observers and industry professionals. These trends bode well for the future of life science business and the places where tomorrow’s jobs may be.