1. D A V I D S E L K I R K
E X E C U T I V E D I R E C T O R ,
L I F E C Y C L E
M A N A G E M E N T
0 6 F E B R U A R Y 2 0 1 4
Sponsor – CRO
Relationships

2. WELCOME & ORIENTATION
 PRESSURES/GOALS OF
SPONSORS & CROS
Market trends & positioning
 EVOLUTION OF SPONSOR/CRO
INTERACTION
History, tactics/strategy, & geography
 WHAT DOES THE FUTURE
HOLD?
Educated guess

3. About the Presenter
 Authored editorials, & presented at industry conferences
on late phase research, post-marketing research/safety, as
well as clinical trial technology
 22 years of experience in the biopharmaceutical industry
with 10 yrs at sponsors & 12 yrs at CROs
 Executive Director, Life Cycle Management
 Vice President, Strategic Partnerships
 Vice President, Late Phase Research
 General Manager, Canadian Operations
 Director, Project Management
 Director, Business Development
 Medical Writer
 Clinical Research Associate
 Extensive international experience throughout North
America, Europe, Latin America and Asia
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All opinions expressed are those of the presenter

4.  WELCOME & ORIENTATION
PRESSURES/GOALS OF
SPONSORS & CROS
Market trends & positioning
 EVOLUTION OF SPONSOR/CRO
INTERACTION
History, tactics/strategy, & geography
 WHAT DOES THE FUTURE
HOLD?
Educated guess

5. Pharma Patent Cliff
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6. Proportion of Market Valuations
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 Heightened competition for deals in 2014

7. Sponsor Pressures & Strategies
PRESSURES
 Anticipated loss of approximately
$78B USD in 2009 - 2014 resulting
from patent cliffs
 Skyrocketing expenses, shrinking
profit margins and increasingly
heavy competition
 Growing regulatory pressure due to
highly publicized drug dangers
 Recurring threats of litigation over
real or perceived drug side effects
 Shifting demographic trends in both
western and emerging markets,
driving the demand for more and
better pharmaceuticals
 Weak pipelines for new drugs in
many large firms
STRATEGIES
 Consolidating via mergers,
acquisitions, and joint ventures to
leverage economies of scale, and
expand their pipeline
 Expanding into new markets and
new product categories
 Cost reduction programs by
restructuring R&D, decreasing their
sales forces
 Increasingly outsourcing to focus on
the core business
 Increasing partnerships and
deliberately focusing on improving
collaborations
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8. Pressures on CROs: Small & Mid-Size
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 Almost half (45%) of the mid-
sized and small CROs were either
absorbed into larger ones, or went
bankrupt over the time period of
2007 - 2012
 Remaining CROs
have specialized to
survive (device,
adaptive design,
ph I, geography

9. CROs Have 3 Choices: Grow, Specialize or Die
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 Biggest CROs are taking an ever increasing share of the
overall CRO market
 Mid-size and small CROs who specialize are maintaining
market share
 Rest of the market is withering away

10. Pressures on CROs: Large Size
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 Large CROs have significantly committed to strategic
alliances
 Higher % of revenue comes from alliance partners
 Revenue from alliance partnerships is generally slower
burning, and lower profit margin while infrastructure is
built

11. What Both Types of Organizations Need
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•Decreased reliance on
unpredictable transactional
bidding
•Reliable and long-term
revenue stream with
known profit margin
•Continuous resource
utilization, minimizing
peaks & valleys
•Guidance on what will be
the future needs of sponsor
organizations
•Strategic thinking to
optimize clinical
development plans
•Reliable study results that
hold up to regulatory
scrutiny
•Global footprint in both
developed and emerging
markets
•Decreased time and cost in
product development

12.  WELCOME & ORIENTATION
 PRESSURES/GOALS OF
SPONSORS & CROS
Market trends & positioning
EVOLUTION OF SPONSOR/CRO
INTERACTION
History, tactics/strategy, & geography
 WHAT DOES THE FUTURE
HOLD?
Educated guess

13. History of Sponsor – CRO Relationships
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 CROs first used as ‘spillover’ capacity, with sporadic demand
in the 80s and 90s
 By 2000, the biotech industry had promising products and
significant funding, but lacked internal infrastructure
 CROs were used heavily which fueled their global expansion
 By 2005, pharma began to utilize CROs to combat $ pressure
http://www.covance.com/products/strategic-partnering/cro-evolution.php

14. Different Models for Pharmaceutical Outsourcing
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Transactional
Sponsor & CRO
have made no
organizational
commitments
Many competing
bidders
Largely price
driven decision-
making
Sponsor brain;
CRO arms & legs
Scope and cost
‘creep’ common
Preferred
Provider
Restricted list of
bidders competing
Procurement
informed by ops
experience
Increased opp for
CRO to give input
Sponsor & CRO
have agreed that
they have mutual
interests
Strategic
Alliance
Usually 1-2
strategic CRO
partners
Studies allocated
by defined criteria
Pipeline informs
clinical
development plans
Pricing defined
with risk-benefit
model
Sponsor & CRO
invested in a long-
term bilateral
relationship
Scope and pricing
patterns improved
Maturation of Trust and
Process Alignment
Maturation of Trust and Process AlignmentMaturation of Trust and Process Alignment

15. EMA Data: Distribution of Investigators
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Source: Compiled data from EMA MAAs from 2005 through 2011

16. Contributions to World Pharma Sales (USD)
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Source: IMS Market Prognosis 2012 and IMSCG analysis

17. Pharma R&D Outsourcing
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18.  WELCOME & ORIENTATION
 PRESSURES/GOALS OF
SPONSORS & CROS
Market trends & positioning
 EVOLUTION OF SPONSOR/CRO
INTERACTION
History, tactics/strategy, & geography
WHAT DOES THE FUTURE
HOLD?
Educated guess

19. Pharma/Biotech Industry Trends
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Emerging
Markets
• Growth in
Asia will
outpace RoW
• Increased
investment in
the region
Mergers &
Acquisitions
• Bolsters
pipelines and
expand
capabilities
Pharmaco-
Economics
• Must
demonstrate
financial value
to payers
Continued
Outsourcing
• Functional
Service
Providers
• Strategic CRO
alliances

20. New Stakeholders
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Biosimilars
Tobacco
Nutraceuticals
Patient-Centred
Outcomes
Companion
Diagnostics
Safety Signal
Detection
Genomics/
Personalized
Medicine

21. Patient Centred Outcomes
 Patients uniquely
positioned to inform
FDA understanding
of clinical context
 FDA benefits from
system to obtain
patients’ viewpoint
re:
• disease severity
• impact on daily life
• treatment options
http://www.patientnetwork.fda.gov/
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22. Patient Centered Outcomes Research Institute
(PCORI)
www.pcori.org
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23. Biologics and Biosimilars
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24. CRO Industry Trends
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 Structure
 CROs will continue to pursue global strategic alliances
 Sponsors will typically have at least 2 strategic CRO partners
 Big CROs will need larger footprints in emerging markets
 Local CROs in Asia will win local work based on price
 CROs will continue to consolidate to augment specialty and
geographic capabilities
 Services
 Biosimilar clinical development will become an area of specialization
for small & mid-size CROs
 Peri-approval and HEOR services will become increasingly
important for product differentiation and reimbursement
 Sub-population identification for oncology companion diagnostics
 Need to offer large groups of staff for functional service provision
 Regulatory expertise needed to guide sponsor thinking on global
clinical development plans, and proper endpoint selection

25. The Future
Strategic partnerships with >1 large
CRO
Specialization of small & mid-sized
CROs
Emerging markets +
biologics/biosimilars
Increased
Outsourcing
M&As in both sponsors & CROs
HEOR + patient centered outcomes
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26. Questions & Discussion
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