Client concentration at big CROs (contract research organisations) has raised concerns that smaller clients are being neglected at the expense of strategic partners. Given the proportion of revenues coming from a few clients this prioritisation could be viewed as a rational business decision.
“Big CROs’ bread is buttered by big pharma”, Michael Harte, president of The Harte Group, told Outsourcing-Pharma. With big CROs perceived to be focused on their top clients “a lot of [biotechs] feel underserved”, Harte said, and are frustrated by difficulties communicating with large vendors.
Peter Sausen, vice president of safety assessment, North America at Covance, said biotechs worry they will “get lost in the shuffle” at large CROs. To stop this happening Covance gives each biotech a contact person and has staff on-hand to help when something goes wrong with the project.
Sausen said his team can move a compound through development twice as quickly as big pharma. As larger companies try to cut costs and timelines they have become more open to the model Covance offers biotechs.
“Big companies are under tremendous pressure to think small”, Harte said. Consequently Covance is doing more project management work for large clients and, Sausen said, this has knock-on benefits for biotechs.
Large pharma work
Working with big pharma gives Covance an idea of what they look at in due diligence, Sausen said. Covance uses this understanding to help biotechs get the data big pharma will want to see before inking a deal.
From 2005 to 2010 Sausen saw the point at which deals are made move to later in development. To help clients Sausen’s team works closely with the Phase I unit to ensure a smooth hand-off. “In terms of structure it’s similar to a big pharma drug development team”, Sausen said.
However, Harte said building large pharma inspired models has made big CROs“bloated”. Harte said sponsors “throw work over the wall” to vendors, which have models mirroring their own, instead of using a more “creative” approach to outsourcing.
An alternative model
The Harte Group works with sponsors to plan outsourcing projects which it then refers to its network of 120 specialist service providers. A fixed price, with caveats to cover acts of God, is then agreed. Harte said the model serves biotechs well but Sausen thinks there are benefits to using large CROs.
A biotech that was just “a doc, a lawyer and a pile of powder” considered outsourcing to Covance but chose a niche CRO instead. The CRO “completely botched the project”, Sausen said, and months later Covance was called in to generate data the biotech needed to meet its venture capital commitment.
“The compound is now in Phase II”, Sausen said.