Will Progressive CROs Become the Next Clinical Informatics Software Vendors?

Introduction

As CROs consolidate and bolster their services to meet the new biopharmaceutical industry challenges, an essential capability they must offer is advanced clinical informatics technologies, which are rapidly becoming an industry imperative. Drug sponsors are increasingly relying on CROs with efficient, robust technological capabilities, along with the expertise and services they need to effectively compete in a fiercely competitive marketplace.

However, only some CROs have developed sufficiently powerful proprietary clinical analytics systems custom-built to suit their internal operations and clients' needs, giving them a significant advantage. For mid-tier and smaller CROs, these purpose-built systems can be too costly to develop.

This article reviews trends in outsourcing R&D, tracks the progress of clinical technology for drug development, and suggests how trends in technology might transform the roles of both drug sponsors and contract service providers in the future. The paper also explores the questions: Are large, progressive CROs who have developed powerful informatics systems better equipped than software vendors to offer innovative technology solutions to the industry? Will they eventually offer their solutions to other outsource service providers, becoming software vendors?

Meeting Technology Needs in a Rapidly Changing Industry

To acquire the technology and services they need, sponsors are outsourcing drug development to CROs at an increasing pace, relying on CROs as long-term strategic partners. The global CRO market is forecasted to grow 9.8% over the period 2014-2019, according to a recent report by Infiniti Research Ltd., and is expected to reach $35 billion through 2015. In sync with this growth, a 2015 Nice Insight survey shows consistently escalating spending for outsourcing over the past four years. Nearly two-thirds of sponsor companies spent $10-$50 million in 2014-15 for outsourcing, a jump of 24 percent from last year and double the number of companies who spent that amount in 2011-2012.

At the same time, the number of CROs worldwide has reached more than 1,100 despite continued consolidation, resulting in fierce competition for the same sponsors and trials. The five largest CROs, which are full-service global providers, hold 55% of the total market.  Also, CDMOs are on the rise, as more companies are basing their business models on a complete outsourcing strategy.

The 2015 Outsourced Pharma West conference brochure said the role of outsourcing throughout a drug’s life cycle continues to grow to the point where the industry needs to consider expanding the definitions of sponsor and service provider. Definitions are expanding because boundaries are blurring among the disciplines and players in the biopharmaceutical outsourcing industry.

An important driver of increased outsourcing is sponsors' preference for service providers that offer advanced informatics technology, which can lower the costs and time of drug development. To meet this need, CROs require advanced systems providing real-time data access and predictive analytics, which are playing a major role as trials become larger, more complex and global. Sponsors must be able to gather and visualize data faster to make smarter decisions sooner.

Ever since outsourcing began, innovative CROs have progressively offered sponsors more advanced technological solutions to speed drug development. Greater efficiencies along the clinical trial development continuum have progressed from paper CRFs to EDC systems as an example. Clinical operations has advanced from manually managed, calendar-based visit schedules to centralized, data-triggered, risk-based monitoring, saving costs and improving productivity in clinical development.

Large, well-established CROs offer specialized research technologies to meet the rising demand for drug development in a diligent manner. The constant changes in clinical research leave most CROs inadequate and highly advanced systems are unfeasible due to budget restrictions. Sponsor access to state-of-the-art technologies at a CRO is accelerating the service provider market. As a result, large CMOs and CROs continue to expand their service offerings, and are becoming technology-platform providers.

The Role of Robust Data Analytics Systems

The CRO industry has historically been known as a low-margin business. To survive, CROs must constantly adapt to meet evolving industry needs, continually offer more advanced services, products and data. To differentiate themselves and favorably compete, many have recently turned to data and analytics technology as a value-added service.

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