Future Challenges of Clinical Development; a View from the CRO - Hani Zaki

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  • Cannot speak about future challenges without a solid understanding of where we are today, and the market forces that will effects us into the future
  • I like to first set the stage of where we are today and talk about the drivers, market dynamics and trends Then I’ll talk about what I see as some future challanges
  • Size (1) Consider the clinical development space today Here is a picture Over 100,000 trials registered in CT.Gov ~ 40% are Pharma based; the others are Gov institutions, academia, hospitals, research institutes, and individual researchers 20K of the Pharma 40K are US based 10K of the 40K are now open for enrollment 8K of the 10K are “Interventional” 50% of the interventional studies have some safety-outcome component So, let’s focus on the Pharma segment. How is this work being done?
  • Economic Drivers (1) Pharma traditionally has acted as innovator/discoverer, formulator, developer, manufacturer, and marketer This model began to slowly change beginning in the 1970’s. At every step post-innovation you can now effectively outsource your needs. From initial pre-clinical testing, to first-in-man, to development, to manufacturing, to marketing and to selling. We’ve come a long way in the past 30 years. The frustration is that we also stood still in many aspects for the past 30 years. And in focusing on clinical development, we are still one of the few industries in the world that still manage to use “NCR paper” on occasion. (Ask what NCR paper is). And although we outsource more than ever in our industry, the standards, process, logistics, efficiencies, and quality metrics are held more or les by the folks that outsource – this is not the norm in other industries The constant that we’ve seen is a palpable shift in where resources reside; and as Pharma outsourcing increases so does the shift in professional resources What does this shift look like? Take a look at the next graph …
  • Size (2)
  • Economic Drivers (2)
  • Economic Drivers (3) If you have ANY doubt about the relationship that I just described take a look at this graph – the clinical research stock index. We established that Pharma development activity and needs have shaped the CRO industry and will continue to shape the CRO industry in the future. Therefore it makes sense to consider what forces are now effecting the global Pharma space since these market pressures will likely shape future Pharmaceutical demands
  • Market Dynamics (1)
  • Market Dynamics (2) One of the biggest challenges facing the drug industry today is the cost of development We are spending 40 times more today for an equal level of productivity This is a picture of an industry in a tail spin
  • Market Dynamics (3)
  • Market Dynamics (4)
  • Market Dynamics (5) Now that we’ve established the drivers of the CRO business let’s look at some of the market dynamics that are now effecting the space, and will continue to do so into the future Recent article in the Wall Street Journal indicating some relief in sight for some industries following adjustments in their businesses as well as positive accumulation of cash But look closely at the Pharma industry
  • Trends (1) The global economy, shrinking pipelines, lower NME approvals, pricing pressures, and loss of patents has effected development and Pharma’s ability to support development. This is reflected in the number of study starts with a trend beginning in 2008
  • Trends (2)
  • Trends (3)
  • Trends (4) – Geographic trends 1
  • Trends (5) – Geographic trends 2
  • Trends (6) – Geographic trends 3
  • Future Challenges of Clinical Development; a View from the CRO - Hani Zaki

    1. 1. 12 January 2011 Hani Zaki, MPH, MBA Senior Vice President, Late Phase Services PRA International Future Challenges of Clinical Development: A View from the CRO
    2. 2. Discussion Agenda <ul><li>Review Current State </li></ul><ul><ul><li>Market Size </li></ul></ul><ul><ul><li>Economic Drivers </li></ul></ul><ul><ul><li>Market Dynamics </li></ul></ul><ul><ul><li>Trends: </li></ul></ul><ul><ul><ul><li>Volume </li></ul></ul></ul><ul><ul><ul><li>Geography </li></ul></ul></ul><ul><ul><ul><li>Price </li></ul></ul></ul><ul><li>Future Look </li></ul><ul><ul><li>Process </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Geography </li></ul></ul><ul><ul><li>Regulatory </li></ul></ul><ul><ul><li>Privacy </li></ul></ul><ul><ul><li>Public Image </li></ul></ul>
    3. 3. Clinical Trials By The Numbers 100,838 trials registered on ClinTrial.gov as of January 3, 2011 40,998 trials are Pharma based 10,192 are “enrolling” 8,824 Interventional 4,633 Safety Outcome 20,982 are US based
    4. 4. Current Working Relationship Working Standards, Process, Logistics, Efficiency & Quality Metrics Resource Shift
    5. 5. Global CRO Market <ul><li>Current ~$22B and expect $35B through 2015; growing ~8% annually </li></ul><ul><li>Over 1,000 CROs worldwide despite continued consolidation – very fragmented market </li></ul><ul><li>The 5 largest CROs hold >50% of the market </li></ul>Source: Business Insights
    6. 6. CRO Economic Forces Development Research (Pharma) Global CRO Business Arlington Mills, Lawrence, MA in 1907
    7. 7. Clinical Research Stock Index First Clinical Research Index (FCRI). Calculated as the mean average percentage change from baseline, dividends excluded, adjusted for stock splits. In other words, the indices are not weighted for stock price or market capitalization. Prices are in local currencies. Index components may change from time to time based on new listings, mergers and other factors. Components include 11 publicly traded clinical research stocks: BioClinica (BIOC:US), CMIC (2309:JP), Covance (CVD:US), Datatrak International (DATA:US), EPS Co., Ltd. (4282:JP), eResearchTechnology (ERES:US), ICON (ICLR:US), Kendle International (KNDL:US), Medidata (MDSO:US), PAREXEL International (PRXL:US), and PPD (PPDI:US). In 2010, MDS Pharma Services (MDZ:US) exited the clinical research business, Phase Forward (PFWD:US) was acquired, and Encorium Group (ENCOD:US)’s stock price dropped below $1/share and became too volatile to include in the index. Vol. 7, No. 1, January 2011 “Can You Handle the Truth?” Subscribe free at www.firstclinical.com © 2011 First Clinical Research First Clinical Research Stock Index (FCRI)
    8. 8. Current Market Pressures Global Pharma <ul><li>Pricing Pressures </li></ul><ul><ul><li>Governments </li></ul></ul><ul><ul><li>Insurers </li></ul></ul><ul><ul><li>Patients </li></ul></ul><ul><li>Anemic approvals </li></ul><ul><li>21 in 2010 </li></ul><ul><li>25 in 2009 </li></ul><ul><li>24 in 2008 </li></ul><ul><li>17 in 2007 </li></ul>IP Protection & Generic Competition <ul><li>R&D ROI </li></ul><ul><ul><li>Weak pipelines </li></ul></ul><ul><ul><li>Investor Demands </li></ul></ul>Rising R&D Expense & Pressure for Efficiency <ul><li>Regulatory Pressures </li></ul><ul><li>Heightened safety needs </li></ul><ul><li>“ Real World” Data </li></ul>
    9. 9. Patent Expiration 2008-2015 $66B in Annual Sales 2011 expirations Total $35.2B
    10. 10. Global Pharma ROI
    11. 11. Flat R&D Budgets Pharmaceutical R&D as a Share of Sales: 1970 -2008
    12. 12. Increasing Cost of Trials
    13. 13. Relief in Sight? Big Firms Poised to Spend Again Saturday, January 1, 2011 By JAMES R. HAGERTY and DANA MATTIOLI
    14. 14. Trends in Clinical Trial Volume <ul><li>Reflects Pharma-based clinical trials only </li></ul><ul><li>Some ClinicalTrials.Gov studies may include missing fields and may be excluded from data cuts </li></ul>Source: CT.gov
    15. 15. Pharma Clinical Trial Volume by Phase Source: CT.gov
    16. 16. Post-Approval Shifts in Study Duration <ul><li>Average study duration has been decreasing since 2005 </li></ul><ul><li>Data suggests a conscious effort to design more efficient studies that are shorter in duration </li></ul><ul><li>Today, 30% of post-approval studies complete in 20 months or less </li></ul><ul><li>5+ year studies do exist but there are less of them compared to 2005 </li></ul>
    17. 17. An Early Geographic Trend
    18. 18. Geographic Density Shift <ul><li>We are moving East: Asia & CEE </li></ul><ul><li>More studies in developing countries </li></ul>Dec 2005 Source: ClinTrial.gov Jan 2011
    19. 19. Post-Approval Geographic Distribution of Sites <ul><li>US and EU have had equal distribution and comprise the bulk of sites </li></ul><ul><li>Noteworthy “steady” growth in Asia-Pacific </li></ul><ul><li>Expect the growth trend in Asia to continue through 2010 and beyond </li></ul>Source: ClinTrial.Gov Number of Sites By Geography Percent Sites By Geography
    20. 20. Comparative Costs By Geography
    21. 21. Trends in Investigator Fees
    22. 22. Phase III Cost Per Patient <ul><li>Costs increased in all Tx areas across all geographies from 2006 to 2010 </li></ul><ul><li>Minimal increase was 4% in Eastern EU for patients with musculoskeletal diseases </li></ul><ul><li>Largest increase was 43% in Asia for oncology patients </li></ul>Source: Data Courtesy of TTC Western EU USA & Canada Middle East Latin America Eastern EU Asia
    23. 23. Some Trends and Needs Trends Needs Significant decrease in NME approvals (revenue) at 40x the expense Development efficiencies Increasing cost of late phase (II, III, IV) development New processes, technology & Innovation Global trials with increasing needs in CEE, Asia, MENA, Africa Global resources, training, standardization Fierce competition for study patients Medical informatics and utilization of emerging new data resources Pharma and Biotech relaying on outsourcing to re-structure expense from fixed to variable CROs leading change in processes, logistics, metrics, delivery and quality
    24. 24. Future Look
    25. 25. Challenge: New Efficiencies Lead Innovation Lead Efficiency Lead Delivery Metrics Lead Quality Metrics Active Approach: Suppliers Setting New Standards Balanced Collaboration Global Bio-Pharmaceutical Industry Discovery Innovation Licensing Supply competitiveness, savings, flexibility, global reach, insight ….
    26. 26. Clinical Trial Costs Is this the most efficient process? Can we do better to reduce burden? Are we building effective partnerships?
    27. 27. Challenge: Technology & Innovation Must be a joint effort between industry, suppliers and regulators Break from 1970’s thinking and processes and re-draw the mechanics of conducting clinical research based on today’s realities, resources and capabilities
    28. 28. How Fast Can We Adapt?
    29. 29. US Adoption of EMR/EHR
    30. 30. Challenge: Broader Geographies Accelerating the rate of enrollment in clinical trials toward reduced costs and quicker results Finding the right patients and navigating narrow inclusion and exclusion criteria Greater competition for patients and the need for larger sample sizes to detect slight differences Ethical considerations Regulatory Oversight
    31. 31. Challenge: Registration vs “Real World” Safety & Efficacy Generalized Safety & Effectiveness
    32. 32. Challenge: Access to Patients Vast cultural differences on healthcare “privacy.” Nordic countries have a tradition of health registries. Every citizen is provided with an identifier from birth and enrolled into registries to elucidate epidemiological trends. Data are used for public health research and improvement of medical care. Can we guarantee healthcare privacy as we break new ground to accelerate research? Can we generalize across countries?
    33. 33. Challenge: Public Image & Understanding <ul><li>Imperative to improve patient understanding </li></ul><ul><li>Transparency </li></ul><ul><li>Enlist global patient support groups and disease societies </li></ul><ul><li>Much work is needed </li></ul>
    34. 34. Concluding Thoughts <ul><li>Healthcare and the global Bio-Pharmaceutical market are undergoing dramatic changes </li></ul><ul><li>Research methods that served us in the past can no longer sustain the industry and today’s ROI models/rates must move to higher levels, and fast </li></ul><ul><li>Bio-Pharma will depend on service providers to innovate and lead transformational changes toward competitiveness, savings, flexibility, global reach, and new insights </li></ul><ul><li>There are many emerging opportunities that can significantly streamline the conduct of clinical research, reduce the burden and complexity, and result in greater efficiency. Focused and deliberate collaboration between regulators, industry and service providers will be key for future advancement </li></ul><ul><li>We must consider dramatic changes in process and bold new structures to transform the industry </li></ul><ul><li>Globalization is here to stay – competition for patients and the need to accelerate trials dictate a worldwide strategy </li></ul><ul><li>Global consensus on privacy issues and access to healthcare data will continue to be the subject of debate. Local, national and cultural differences must be respected. Trust is earned. </li></ul><ul><li>We must educate patients and the general public and provide transparency and access to research information. </li></ul>THANK YOU! Hani Zaki [email_address] + 1 215.444.8544

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