The Drivers and Barriers to Growth in the CRO Industry

Biotechnology R&D spending reached $45.7 billion by FY2016, this represented a 12% increase from the previous financial year. This was the seventh consecutive year that biotech companies increased their cumulative R&D spending and has led to a booming CRO market, expected to nearly double in a six-year period from $34 billion in 2014 to $59.42 billion in 2020. Commensurate with this market growth and as a “knock-on” effect, there has been a notable emergence of niche or specialised CROs as well as a proliferation of mergers and acquisitions as  companies attempt to solidify their position in a highly competitive industry.

The key CRO players continue to maintain their service focus on recruiting, developing, and retaining top performing sites. Recent hikes in clinical development programs in the last five years has caused a disparity between the growing number of studies and that of the clinical sites willing to conduct studies. This disparity has been noted as early as 2012 in a press release by CenterWatch, which reported the average number of new studies initiated by the 60 highest volume sites in the U.S. and Canada fell by 85%. This disparity has also attributed to the challenges for CROs to attract and retain top performing sites that offer the patient base and support for the protocol.

Contract Pharma reported this time last year from a survey conducted in collaboration with the Society for Clinical Research Sites (SCRS) that more than three-quarters of sites found reimbursement timelines to have an influence on their ability to cover the costs of stipends and reimbursements to patients. Delay in payments has made it challenging for studies to operate efficiently as they impact on all parties involved from site to patient.

Undoubtedly it is critically important for a CRO to understand and deal with operational issues faced by sites when conducting a study. A significant pain point is that the CRO has unrealistic cost and time expectations of the study site. Initial start-up costs of the study can easily exceed $50,000. Although ultimately it is down to the sponsor to pay this cost, a site can be faced with the financial challenge with their cash flow position to cover such exorbitant fees upfront due to delay in payment delays from the sponsor. Moreover, the timeline between site identification and the actual start of the study, can be up to seven months. Patient recruitment and retention can be the biggest stumbling block for clinical trial management. As reported recently by Clinical Leader, in the US, roughly 80 percent of clinical trials fail to meet their enrolment targets and timelines, and as much as a half of US trial sites enrol as little as one patient or no patients at all. Another alarming statistic coming from US clinical trials is that patient recruitment and retention operations account for over 25 percent of total clinical trial costs.

Start up costs are only part of the cost problem, with sites often being asked to pay out of pocket costs throughout the duration of the study because of inconsistent and unrealistic payments from Sponsors and CROs. The SCRS also recently reported that 66% of sites globally have desperate  cash flow positions of less than three months’ worth of operating funds. Both infrequent and inconsistent payments, coupled with bureaucratic invoicing processes, creates unnecessary financial stress and increased administrative burden for sites, diluting the research focus of operations and often forcing sites to take on new protocols.

Ever increasingly complicated protocols and regulations raise the stakes of success for CROs, making feasibility, staff training and ongoing support more challenging for clinical sites. Moreover, global, orphan and rare disease studies by default are complex enough with their innate regulatory intricacies as well as the patient recruitment difficulties.

Implementing the tools and technology for ongoing site success is another strategy employed by CROs in gaining a competitive edge. With eClinical trials technology as an added competitive element, CROs are under more pressure than ever before from sponsors to groom and retain investigative sites. A critical success factor today's CRO lies in retaining both sites and patients, impelling both to treat each other as valued partners. Ultimately today's successful CROs are developing trust and loyalty for a long-lasting partnership in the patients they recruit and the means to accomplish this goal is by understanding and addressing the various operational hurdles faced by both sites and patients.

In dealing with site issues, efficiency of processes is key for CROs as it endeavours to reduce administrative burdens and costs. The pathway to improved efficiency and cost reduction is undoubtedly through cutting edge technology; implementing Web-based tools that offer seamless workflows and operational integration into a site’s existing operational system for a more streamlined process.

Adoption of a best-in-class technology solution can reduce administrative burdens in several ways, including the ability to execute payments in compliance with standardised 30-day timelines whilst automating the otherwise complex invoicing procedures. A flexible and robust technology platform supported by an expert IT staff can also manage various global regulations, ensuring compliance for sites at the global level.

As mentioned earlier increased R&D spending consecutively in the past seven years in the biopharmaceutical sector has had a knock-on effect in the growth of clinical research which in turn has led to and will continue to drive competition among large and small CROs. Consequently maintaining a competitive edge for a CRO lies in retention of its top performing sites which have the capability to support these studies. While patient retention begins with the site and in turn giving sites the needed equipment and funding to successfully conduct the trial is the way to building loyalty and trust for long-term success. Additionally adopting an innovative strategy by introducing sites to a unique technology platform that streamlines operations of data reporting and management as well as automating the payment and invoicing processes can be the most cost effective means of differentiating the service offering. Efficient work processes frees up the time for sites to take on supplementary trials, ultimately developing and strengthening a long term relationship between the CRO, site and sponsor.