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Functional CRO Networks - An Emerging Trend

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As large global Clinical Research Organizations (CROs) increase their market share from 60% to 75% in the next 4-5 years, R&D sourcing organizations will be presented with new opportunities to engage …

As large global Clinical Research Organizations (CROs) increase their market share from 60% to 75% in the next 4-5 years, R&D sourcing organizations will be presented with new opportunities to engage with functional CRO networks. Through these networks, organizations can source clinical trial services faster and more cost effectively.

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  • 1. MARCH | 2011Copyright © Beroe Inc, 2011. All Rights Reserved 1Functional CRO Networks:An Emerging Alternative to Global CROs
  • 2. IntroductionAccording to data published by the Office of the InspectorGeneral (OIG) in the US,more than 50% of patients wererecruited from foreign sites, including emerging clinicaltrial destinations like India, China, Latin America, andCEE countries. Therefore, it is no exaggeration to saythat the pharma companies that can manage globalclinical trials most efficiently will be the most successful.Large global CROs are viewed as the natural choice forconducting global trials due to their geographical reachand scale of operation.The CRO market is highly consolidated. Nonetheless,consolidation is expected to increase in the next 4-5years as large global CROs expand their geographicalreach and service portfolios by acquiring niche and localCROs in different regions.This consolidation is expectedto increase the bargaining power of global CROs. As aresult, pharma companies are searching for alternativesto large global CROs, such as a network of regionalCROs. Pharma companies are also questioning whetherglobal CROs can act fast enough in this environment,which demands speed (longer patent protection) andcost effectiveness (reduced R&D spending).Global CROs vs. Regional CROsGlobal Trial Management CompetencyParametersGlobalCRORegionalCROSingle Point Contact 5 1Access to Opinion Leaders 1 5Speed/Flexibility 1 5Recruitment Rate 2 5Speedy Regulatory Approval 3 5Compliance with LocalRequirements1 5Site Management 2 5Experience 2 5Low Bureaucracy 5 1Centralized VendorManagement5 1Staff Turnover 2 5Overheads 5 3Financial Stability 5 3Geographical Reach 5 2IT Infrastructure 5 2Functional CRO NetworkThe advantages offered by regional CROs are offset byfactors like their lack of geographical reach and centralvendor management capabilities. As a result, functionalCRO networks (i.e. networks made up of local/regionalCROs specializing in various functional areas in differentregions) have emerged.How Functional CRO Networks OperateMost of these networks (Harte Group, QED, Clinterra,Research Point, PSN, and Health Decisions) have aformal operations manual.The operations manual ensuresall franchisees work to the same standard regardless oflocation. It is a step-by-step guide on how to run thenetwork. The operations manual covers all roles, duties,and responsibilities of the network that make up thebusiness system, from the initial RFI/RFP process toundertaking clinical trial monitoring assignments. Eachsection covers a specific element of the business andprovides details on the policies, procedures, and methodsto be used.With this manual in place,networks can definecommon quality standards across the entire organizationand guarantee consistent high quality service.In addition,they have a clearly defined set of global SOPs, which arefollowed if adherence to sponsor SOPs is not requested.The Harte Group selects and manages a core groupof vendors who best fit the study or program needs.Following review of the client program or protocol, itevaluates,selects,and presents the best team approach forthe opportunity. Additionally,The Harte Group managesvendor activities, including protocol development andclinical study reports, to minimize rework and completeprojects on time and on budget.If a provider does not perform as stipulated, the rules ofthe network allow for a new provider to be used in placeof the original.This practice gives suppliers the incentiveto perform and provides peace of mind for sponsors.Copyright © Beroe Inc, 2011. All Rights Reserved 2Note: 1:Very Low Advantage | 2: Low Advantage |3: Moderate Advantage | 4: High Advantage |5:Very High Advantage
  • 3. Copyright © Beroe Inc, 2011. All Rights Reserved 3For the Netherlands-based CRO network,PharmaceuticalService Network (PSN), potential members are requiredto be owner-driven (they cannot be a part of a largercompany). Prospective members should have existed forat least three years. They should be willing to disclosetheir financial statements, and their financial health hasto be excellent. In addition, potential members have topossess knowledge of their local market’s regulations,have a solid grasp of the culture, and be willing to sharepotentially proprietary information with other membersof the network.Pricing PolicyMember CROs of PSN do not have uniform pricingpolicies across the globe but do ensure their prices arein the same ballpark and do not conflict with generalnational pricing rules. Sponsors are not obliged to useother PSN members. PSN is working on a template for aunified contract that could be used by all member CROsfor any clinical trial.What Value Can a Functional CRO NetworkProvide Large Global CROs?1. Functional CRO networks provide global reachwithout loss of local knowledge. Resources arelocated on the ground in each country, meaning thatlocal requirements, intricacies, processes, logistics,and language are all thoroughly understood.2. The functional CRO networks model reduces overheadsas it leverages the infrastructure and resourcesof already well-established local franchisees andpartners. Larger, full service global CROs oftenprovide a less cost effective solution.Furthermore,theoverheads associated with a traditional CRO can resultin escalated project management and administrativecosts.3.This structure allows resources to be ramped upquickly to meet the specific needs of sponsors.Whethera large global project team or local resource isrequired on a fully Integrated or standalone basis,this model can provide resources tailored to individualproject requirements. Its lean reporting structurenot only ensures total accountability but also cleartransparency at the senior management level, whichfacilitates effective resource planning and alignment.4.A single fixed price contract that covers all FSPs asponsor needs during a trial can radically simplify theprocess of identifying and hiring several suppliers.5.Functional CRO networks have faster turnaroundtimes than global CROs. Their knowledge of localrequirements results in shorter set up times.“Many of the talented, experienced staff which rests inthese companies has worked in sponsor or CRO settingspreviously.They are artisans who wish to practice theirchosen craft,and enjoy the companies who employ them.Thus, turnover percentages are very small.These peopleare not just starting out in the industry. They have notbeen anesthetized inside the well-padded walls of largecorporate bureaucracies.They have not lost the verve oftheir early years. Indeed, they continue to love clinicaltrials.They just might not want to spend all their wakinghours wading through five or six layers of management.In essence, the smaller FSPs are entrepreneurialrefugees from large CROs and sponsor firms. If they’reworking for Harte, they might have twenty years ofexperience, not two.”Michael Harte,Founder President of the Harte Group
  • 4. Disclaimer: Strictly no photocopying or redistribution is allowed without prior written consent from Beroe Inc.The information contained in this publication was derived from carefully selected sources. Any opinions expressedreflect the current judgment of the author and are subject to change without notice.Beroe Inc accepts no responsibilityfor any liability arising from use of this document or its contents.For more information, please contact info@beroe-inc.com.Author:Sriman Das |Domain LeadReferences• “CRO Network Expands,” clinpage, September 2009• “New Global CRO Network,” clinpage, November 2009• “GVK Biosciences Joins ResearchPoint Global’s Worldwide CRO Network,” Genengnews, January 2010• “ResearchPoint Global Continues to Grow, Add CRO Partners,” Centerwatch, February 2010• “CRO Network Alliance Expands,” appliedclinicaltrialsonline.findpharma.com, June 2008• “Specialty CRO opportunities,” PharmaVoice, April 2010• “Survival Tactics for Small CROs,” Contractpharma, November/December 2009Copyright © Beroe Inc, 2011. All Rights Reserved 10ConclusionAs large global CROs increase their market share from 60% to 75% in the next 4-5 years, RD sourcingorganizations will be presented with new opportunities to engage with functional CRO networks. Through thesenetworks, organizations can source clinical trial services faster and more cost effectively.