CROs will support sponsors through unprecedented change
Need to boost innovation, cut developmental timelines and increase the probability of success, while limiting spending, is forcing biopharm to evolve. Increased outsourcing and strategic partnerships are two consequences of this more open, innovative approach.
“Demand for strategic partnerships accelerated faster than we expected”, Mark Goldberg, chief operating officer at Parexel, told Outsourcing-Pharma.
Underpinning surging sponsor interest is the realisation that relatively few CROs (contract research organisations) have the scale and global reach to make these partnerships work, says Goldberg. In response to this realisation sponsors have moved quickly to make sure they get “a seat at the table”.
Moving to the new model had unforeseen consequences for Parexel. “We have come to realise, and, I guess accept, that the conversion of backlog from partnership new business, is just slower”, said Josef von Rickenbach, CEO of Parexel, in a conference call with investors.
"I actually believe that eventually over time, maybe as much as two years into a partnership, that conversion rates will come up to roughly the same levels...as in the past, but in the ramp up...it's just slower", said von Rickenbach.
Deal structure variation
While these issues impact some strategic partnerships others are unaffected. Variability was referred to by Eric Coldwell, managing director, healthcare equity research at RW Baird, who said the term strategic partnership has been applied to a range of deal structures. As such, it is unclear exactly what the term means.
At this stage it is also unclear if strategic partnerships work, said Coldwell. Having emerged relatively recently there is too little data or history to base an opinion on but it is clear smart, successful CROs back the concept.
“Our view: when 100 per cent of our conversations with the signers of these deals provide the same response: “We want these deals and we believe that they will provide superior margins,” we’re inclined to give the benefit of the doubt”, said Coldwell.
